Benin Republic raises $750 million in first-ever dollar bonds as demand hit $5 billion.
In a historic move, the Benin Republic has successfully raised $750 million through its inaugural dollar-denominated bond issuance, marking a significant achievement in the country’s financial landscape. Demand soared to an impressive $5 billion, underscoring robust investor confidence in Benin’s macroeconomic outlook.
Finance Minister Romuald Wadagni disclosed that the proceeds from the issuance of 14-year bonds, bearing an interest rate of 8.375%, will be allocated towards funding the country’s 2024 budgetary requirements.
This landmark bond sale follows closely on the heels of Ivory Coast’s oversubscribed Eurobond auction, where $2.6 billion was raised. Notably, Benin’s bond yields, comparable to those of Ivory Coast, have raised eyebrows among experts in the international bond market.
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Simon Quijano-Evans, Chief Economist at Gemcorp Capital Management in London, remarked to clients on the unexpected parity in yields between Benin and Ivory Coast, highlighting the surprising success of Benin’s debut USD external bond issuance.
Key Points to Note:
- Benin Republic boasts one of Sub-Saharan Africa’s fastest-growing economies, with a projected average GDP growth of 6.4% for the 2024-25 period.
- The country has demonstrated commendable macroeconomic stability, evidenced by a modest inflation rate of 0.40% in December 2023, compared to -0.20% in November 2023.
- In July 2022, the IMF approved an Extended Fund Facility and Extended Credit Facility totaling $638 million for Benin. A subsequent IMF visit in October 2023 for the program’s third review concluded with positive remarks on the country’s performance and fiscal consolidation efforts.
This groundbreaking bond issuance signifies Benin Republic’s emergence as a key player in the international financial market, bolstering its economic resilience and fostering investor confidence in its growth trajectory.
