By 
(Ecofin Agency) – The financing needs for 2025 are estimated at CFA1,200 billion ($1.9 billion), including CFA610 billion through medium- and long-term debt issuance and CFA545 billion raised on the regional financial market via Treasury bills and bonds.
Benin has successfully raised $1 billion through two simultaneous operations on international markets, making it the first African country to issue sovereign debt this year.
The first operation was a bond issuance of $500 million with a 16-year term, three years longer than the country’s previous market entry in February 2024, when it raised $750 million. The bond carries a coupon of 6.48%, made possible by a dollar-euro hedge covering the entire amount. The demand was seven times higher than the offer, with the order book reaching $3.5 billion.
The interest rate without the hedge has not yet been disclosed. However, in the 2024 issuance, a 6.50% coupon in euros translated to a 7.96% rate in dollars. According to Benin’s authorities, “investor interest allowed for a 75 basis point reduction in the yield at issuance” during the issuance day, while bonds issued last year were trading around 8.8% yield as of last week.
At the same time, Benin secured a €500 million loan from Deutsche Bank, offering an advantageous 6% interest rate and a 15-year maturity. The loan is backed by a partial guarantee of €200 million from the International Development Association (IDA), marking the first use of the new unified guarantee platform launched by the World Bank in July 2024, and managed by the Multilateral Investment Guarantee Agency (MIGA).
The commercial loan will partly be used to repurchase a portion of the country’s 2032 Eurobond, allowing Benin to reduce its debt service costs while extending its average maturity.
According to the Minister of Economy and Finance, Romuald Wadagni (pictured), the country’s public debt stands at 53.7% of GDP with a controlled budget deficit. The average maturity of the public debt portfolio is approximately 8.9 years, and the average interest rate was 3.4% at the end of 2024. The country aimed to raise up to €250 million through euro-denominated bonds with a 4.875% rate.
The funds raised will be used to finance projects related to the Sustainable Development Goals (SDGs), particularly in priority sectors of the government’s action plan, the Ministry of Economy and Finance announced.
The financial closures are set for January 23 and 29, 2025, for the bond issuance and the bond repurchase, respectively.
Comments