The world's largest cocoa producer has managed to issue €1 billion in bonds on favourable terms.

This is a further sign of renewed optimism in the markets. Côte d'Ivoire managed to issue €1 billion of bonds on Tuesday on international capital markets, a first for a sub-Saharan African country since the start of the coronavirus crisis and just over a week after Zambia's default. Ghana and Gabon were the last two to have had access to it earlier this year.

The world's largest cocoa producer has benefited from strong demand from investors looking for yields but also from particularly favourable financial conditions in the markets with the influx of liquidity from central banks. Demand reached €3.1 billion, which allowed Côte d'Ivoire to raise its ambitions (it planned an issue of €825 million) and obtain a low financing cost for an issuer in its category. The country is rated Ba3 by Moody's and B+ by Fitch Rating.

This 11.2-year issue (maturity 2032) was placed on the basis of a yield of 5% (below the initial price of 5.5%), which is slightly lower than the price on the secondary market. The 2030 bond was trading before the deal on the basis of a yield of 4.7%, close to its low at the beginning of the year (4.4%). Last year, in October, the country issued a loan of the same maturity with a yield of 5.875%.

Renewed interest 

investors

Debt securities have not only erased their fall following Covid-19 but are now trading below their price of a year ago. All emerging market debt has benefited from a renewed investor appetite in recent months allowing spreads to tighten. The main emerging countries were able to issue on the markets. For Côte d'Ivoire, however, it was necessary to wait for the re-election of Alassane Ouattara as president, even if it is still contested by the opposition. The climate was particularly deleterious during the campaign with a lot of violence. But investors seem to believe in a return to calm and are betting on the continuation of the market-friendly growth policy carried out during his first two mandates.

Economists at Moody's anticipate a rebound in growth to 7% in 2021, returning to the trend of recent years, after a fall to 1.9% this year. The rating agency had confirmed its rating in early August considering that Côte d'Ivoire's request for a freeze on its multilateral debt service as part of the G20 debt service suspension initiative (ISSD) was integrated into the rating. Some feared that countries applying for it would then encounter difficulties in coming to the markets to refinance themselves. The Ivory Coast show seems to show that it is not. But the country is one of the largest of those affected by the ISSD and has a lower level of risk, even if it has already been lacking in the past.

Because if the Ivory Coast has managed to issue Eurobonds, nothing says that others will be able to do so. In any case, in such good conditions. However, the refinancing needs for ISSD-eligible countries (for the most part, sub-Saharan African countries) are estimated at $127 billion for 2021 by the Institute of International Finance (IIF).