The early redemption operation of half of the Eurobond 2025 of the Gabonese Republic, decided and announced on October 21, 2024 by the President of the Transition, President of the Republic, Head of State, Brigadier General Brice Clotaire OLIGUI NGUEMA, was launched on the international financial markets on November 7, 2024 and closed on November 14, 2024. This operation involved a maximum principal amount of 290 million Dollars (180 billion CFA francs), for an outstanding principal of 605 million Dollars (376 billion CFA francs) and whose maturity was set for June 16, 2025.
The repurchase objective of 290 million dollars (180 billion CFA francs) was fully achieved, with the participation of more than 260 international investors, for an amount of 442 million US dollars (275 billion CFA francs), or more than 156 %. The transaction was completed at a price of 99.25 cents on the dollar. The performance of this buyback operation is very appreciable compared to similar actions carried out since the start of 2024 by comparable countries.
Following this repurchase operation, the outstanding amount of the Eurobond 2025 of the Gabonese Republic will be reduced to 315 million Dollars.
This unprecedented operation which will leave a positive mark on the history of credit is the result of exemplary collaboration between the Administration and local banks. It is part of the proactive public debt management strategy of the Republic: the repurchase was financed by bond issues carried out on the sub-regional market through two domestic syndication operations, thus making it possible to convert part of the external debt to internal debt.
Since the announcement of the operation, the performance of the Republic’s other Eurobonds has improved significantly, with a reduction in yields of almost 60 basis points on average, reflecting the renewed confidence of international investors in a marked global context. by high volatility.
This innovative approach demonstrates the capacity of the Gabonese Republic and the Transition authorities to provide relevant and adapted responses to the challenges of active management of public debt. The very favorable reception of the operation by investors and international rating agencies allowed the Gabonese Republic to reposition its credit and confirm the credibility of Gabon‘s medium-term financing strategy.
Source: Ministry of the Economy and Participations
2024-11-18 11:13:00
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What are the key factors that led to the success of Gabon’s Eurobond buyback operation?
**Interview with Dr. Marie Dupont, Financial Analyst, on Gabon’s Successful Eurobond Buyback**
**Editor:** Thank you for joining us today, Dr. Dupont. Gabon recently executed an early redemption of half of its Eurobond due in 2025. Can you provide us with a brief overview of the operation and its significance?
**Dr. Dupont:** Thank you for having me. Yes, the Gabonese Republic’s early redemption operation was a significant financial move announced by President Brice Clotaire Oligui Nguema on October 21, 2024, and executed between November 7 and November 14, 2024. The government aimed to repurchase $290 million of its Eurobond, which had an outstanding principal of $605 million due in June 2025. The full objective was achieved, with over $442 million in bids received from more than 260 international investors, which demonstrates strong market confidence in Gabon’s financial management.
**Editor:** That’s quite impressive. What factors do you think contributed to the success of this buyback operation?
**Dr. Dupont:** Several factors played a role. First, the active engagement of international investors showed a positive perception of Gabon’s economic direction. The buyback price of 99.25 cents on the dollar was competitive, encouraging participation. Additionally, Gabon has made strides in fiscal management, and this operation reflects the government’s commitment to reducing its debt burden. The high oversubscription rate—over 156%—is a strong indicator of investor confidence.
**Editor:** How does this operation compare with similar actions taken by other countries in the region this year?
**Dr. Dupont:** This operation is quite notable. Many countries have struggled with debt management in 2024, facing economic challenges due to global factors like inflation and rising interest rates. Gabon’s ability to execute such a successful buyback amidst these challenges stands out positively. This operation not only demonstrates Gabon’s proactive approach but also sets a precedent for how emerging economies can manage their debt sustainably.
**Editor:** What implications does this have for Gabon’s economic future?
**Dr. Dupont:** Reducing the outstanding debt on the Eurobond is crucial for Gabon. It eases future repayment pressures and could improve credit ratings, making it easier and cheaper to raise funds in international markets. It could also pave the way for more investment in critical infrastructure and social services, which would ultimately support economic growth and stability.
**Editor:** Thank you for your insights, Dr. Dupont. This looks to be an important chapter in Gabon’s financial history.
**Dr. Dupont:** Thank you for having me. It will be interesting to see how this plays out in the coming years.