(Bloomberg) — A bond-sale boom in emerging markets has expanded to high-yield borrowers, with Ivory Coast tapping the market for the first time for any sub-Saharan African country since April 2022.
The world’s largest cocoa producer is offering $2.5 billion of debt, via a sustainable bond maturing in 2033 and a conventional bond due 2037, according to people familiar with the matter, who asked not be identified because they’re not authorized to speak about it. Guidance for the issues that may price today improved over initial thoughts.
With the Federal Reserve expected to cut interest rates in 2024, the year has begun with a flurry of new issues, driven by investors keen to lock in current yields. Activity was initially confined to investment-grade borrowers who have totted up $68.5 billion of deals so far. Ivory Coast’s offering suggests the rush is now spilling over to junk-rated borrowers that might help Africa, home to some of the world’s most prolific dollar-debt issuers, come out of a lockout driven by debt distress and tightening monetary conditions.
The nation was getting a “fair deal,” but other issuers from the region may not witness the same reception, said Maciej Woznica, a fixed-income money manager at Coeli Frontier Markets AB.
“This is the blue chip,” he said. “They are the obvious and strongest issuer in Sub-Saharan Africa.”
Yields on Ivory Coast’s dollar bonds due in July 2024 fell 76 basis points by 2:42 p.m. in London to trade at 7.68%.
Initial thoughts on the 2037 bond were in the 8.875% area, with fresh guidance pegging them between 8.5% and 8.625%. The sustainability notes signaled an initial pricing of 8.375%, but guidance now has them between 8% and 8.125%. Both may price Tuesday.
Ivory Coast is rated Ba3, with a positive outlook by Moody’s, and BB- with stable outlook by both S&P and Fitch.
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