• High rates for Burkina
• Discreet on the public securities market in 4e quarter
• Public offerings save the day
Ln January 18, 2023, in Burkina Faso, the General Directorate of the Treasury and Public Accounting reconnected with the public securities market. The government is looking for 40 billion FCFA on this market, through a simultaneous issue of assimilable Treasury bonds. The results of this first issue of the year will be scrutinized very closely by observers, especially since the country’s signature was not very run by investors as the authorities wished. The proof is that the country was practically absent from the calendar of emissions for the last quarter. “A precautionary principle”, explains an observer of the financial market, just to gain a little time, despite the government’s pressing need for liquidity. Indeed, Burkina was facing interest rates and running in addition the risk of not covering their needs.
Thus, in the first quarter of 2022, 250 billion FCFA were announced. This amount was revised downwards to 210 billion FCFA, with a final achievement of 216 billion FCFA. But already, the effect of the coup had begun to make itself felt: higher rates of return, downward revision of the amounts to be raised, local investors increasingly solicited.
In the second quarter, the country mobilized 138.5 billion out of the 165 billion announced
In the third quarter, out of 125 billion FCFA announced, the country withheld 128.79 billion.
In the fourth quarter, the country made no emissions
Noting the lack of enthusiasm for its signature on this public securities market, Burkina has switched, during the last quarter, to the regional financial market, through three (3) bond loans by public call for savings. According to our information, these public calls were not initially in the 2022 program. They were imposed by the consequences of the political situation on the national economy. Indeed, the coup of September 30 came at a time when the country and its technical and financial partners were beginning to digest the putsch of January 24, 2022, with a gradual return to confidence in the financial markets. The proof, in January 2022, the financial rating agency Standard and Poor’s, which had previously rated Burkina “B”, a downgraded Burkina’s rating to CCC, with a risk of default on its debt and placed him under surveillance. But in June 2022, the agency had raised this “credit watch” monitoring measure, thus removing the threat of “payment default”.
“We have withdrawn our long-term ratings on Burkina Faso from CreditWatch in development,” the agency announced, in its final assessment report, on May 13, 2022.
This good news was to help restore confidence among investors and give the Treasury free rein to intervene in the public debt market when the second coup happened. In the wake of this political event, a new rating for the agency fell in November 2022, but it maintained the previous rating.
The first borrowing by public call for savings (TPBF 6.30% 2022-2034) took place only in August 2022. This made it possible to mobilize 165 billion FCFA. He might explain the cancellation the following month, by September 2022, the simultaneous issue of Treasury Recovery Bonds (OdR), with a maturity of 3 years and 5 years and an amount of 30 billion FCFA on the public securities market.
The second loan raised 127,350,000,000, arranged by SBIF, and the third who was arranged by Coris Bourse was able to mobilize 150 billion francs at the rate of 6%. This loan, which covered the period from December 19 to December 29, had to be extended to January 5, 2023, if we stick to the press release from the Minister of Economy, Finance and Prospective. The coverage rate achieved is satisfactory for the authorities, since it was 115.34%. These last two operations took place take place at the end of the year, a period which is not always favorable to financial and banking establishments, mainly involved in the mobilization of resources. This might explain the extension of the last operation. A hypothesis on which some observers rely to say that a second round of table was necessary to meet the objective of 150 billion FCFA.
Mobilization difficulties are becoming real and the country also owes its results to the quality of its leaders to whom the government has entrusted the arrangement of its borrowing operations; what will happen in 2023. If the economic situation does not ease. With everything related to the political and security situation, the specialists we met are counting on even higher rates and short maturities, in the absence of good visibility on the country’s situation.
AT
