Gabon may issue another Eurobond before the end of the year as it looks for ways to lower the cost of its debt.
OPEC’s second-smallest oil producer issued Africa’s first Eurobond of 2020 last month. The government will monitor how the market performs in six months and then assess its needs, Finance Minister Jean-Marie Ogandaga said by phone from the capital, Libreville.
Gabon went to the market asking for $1 billion and got $3.5 billion in offers and that is “testimony to the confidence the market has,” he said. The debt was issued at a yield of 6.625%, which was at the lower limit of the price-guidance range.
The central African nation depends largely on world demand for manganese and oil and it’s been diversifying into logging and agriculture to be less exposed to the impact of fluctuating crude prices. While global crude demand is expected to drop for the first time in over a decade this quarter as the coronavirus batters China’s economy, the minister says it’s only a “conjunctural factor rather than structural.”
The African Development Bank approved a $109 million loan earlier this month for the development of a key agricultural project over five years. Ogandaga’s predecessor Roger Owono Mba said in October a positive report card from the International Monetary Fund under its three-year program that ends in June was helping the country get access to new sources of financing.
Ogandaga said economic growth could pick up to as high as 5% if global market conditions remain favorable. That compares with the IMF’s forecast of 3.4% for this year.
Gabon is one of six nations using the central African CFA franc. The members of the Economic and Monetary Community of Central Africa said last year they want to adopt a new currency, echoing plans of West Africa’s Francophone countries to reform a payment unit that dates back to their colonial past. Both groups seem likely to maintain the currencies’ peg to the euro.
“The heads of state have reaffirmed their cooperation with France within the framework of the agreement with the euro,” said Ogandaga. The convertibility of the franc’s euro-peg is guaranteed by France.