Cote d’Ivoire’s Debt Profile to Improve on Eurobond Issuance: S&P

S&P Global Ratings said on Thursday that the latest Eurobond issuance by Cote d’Ivoire (BB/Stable/B) will allow the sovereign to smooth its amortization profile.

The authorities plan to use a large part of the proceeds to prefinance upcoming repayments of commercial debt; specifically, part of the 2028 and 2032 Eurobonds and debt contracted with international banks, according to a statement.

The global credit rating agency said: “In addition, Cote d’Ivoire issued a local currency denominated (CFA franc; XOF) tranche on the international market, a first in Africa. The proceeds will be used to finance the government’s 2025 budget.

“Cote d’Ivoire’s issuance consisted of: A $1.75 billion tranche with a maturity of 11 years. After hedging, the country’s effective exposure will be in euros, limiting foreign-exchange risks given the peg, and the coupon rate is approximately 6.4%. A euro-equivalent 335 million XOF-denominated tranche that has a maturity of three years and a coupon of 6.875% (yield of 7.625%). The debt service, principal, and interests will be settled in euros, although the underlying foreign exchange risk will be borne by investors. Both issuances were oversubscribed, with the orderbook on the U.S.-dollar denominated tranche exceeding $5 billion.

“The strong demand for the XOF-denominated tranche, with an orderbook exceeding euro-equivalent 400 million, allowed the government to upsize its issuance from an initial target of euro-equivalent 200 million to euro-equivalent 250 million. This operation will raise visibility for the still developing XOF capital market. Nevertheless, attracting international investors in West African Economic and Monetary Union (WAEMU)’s regional financial market will take time as the financial infrastructure improves.

“In our view, the strong demand by investors illustrates the sovereign’s standing in the capital markets and its access to various sources of financing. We think that the country’s strong economic prospects, reform drive, ongoing fiscal consolidation, and the benefits of WAEMU membership have shored up investors’ confidence.

“We currently forecast that Cote d’Ivoire’s real GDP growth will average about 6.7% over 2025-2027, outperforming peers, and the budget deficit will reach 3% of GDP in 2025, down from almost 7% in 2022. Rapidly increasing hydrocarbon and mining exports, and the ongoing industrialization will support economic growth and exports. In addition, we think that the authorities’ proactive debt management continues to improve the country’s debt profile and contain the risks stemming from the debt stock.”