Ivory Coast’s Eurobonds sank to a record-low 40 cents on the dollar after the world’s biggest cocoa producer missed a $29 million interest payment amid a fight for political control of the West African nation.
The yield on the 2.5 percent notes due in December 2032 rose to 15.9 percent as of 4:14 p.m. in Johannesburg, according to bid prices from BNP Paribas. The government, which defaulted on $2.4 billion of bonds in 2000, sold the new securities in April. They traded as high as 63 cents in November.
“We are obviously rather concerned,” said Phillip Blackwood, head of emerging markets at Sydbank A/S, Denmark’s fourth-largest bank. “With so much uncertainty as to who is really in control of public finances, there is a serious risk that if no solution is found to the political standstill, investors could be staring another Ivory Coast default in the face.”
Ivory Coast, which doesn’t have a sovereign debt rating, missed the payment due on Dec. 31 and has until the end of the month before the country will be in default, Thierry Desjardins, senior vice president in charge of sovereign debt restructuring at BNP Paribas, said in a telephone interview from Paris today. Leadership of the country is in doubt as Laurent Gbagbo, the country’s president for the past decade, and Alassane Ouattara, the United Nations-backed winner of the Nov. 28 election, tussle for control.
The Central Bank of West African States recognized Ouattara as president on Dec. 24, giving him control over state reserves previously governed by Gbagbo.
Charles Boa, a spokesman for Ivory Coast’s finance minister, didn’t answer calls to his mobile phone today. Affi N’Guessan, a spokesman for Gbagbo, also didn’t answer his phone when called by Bloomberg.
African officials began a new effort to end Ivory Coast’s political crisis today as regional military commanders drew up plans to remove Gbagbo if he fails to transfer power peacefully.
Kenyan Prime Minister Raila Odinga, appointed by the African Union last month to help resolve the impasse, traveled to the region yesterday and is scheduled to hold talks with Nigerian President Goodluck Jonathan and other West African leaders on the crisis, his office said in a statement yesterday.
Ouattara is holed up in a hotel in the commercial capital of Abidjan, protected by UN peacekeepers and surrounded by the military that backs Gbagbo.
“The fact that Ivory Coast has not been able to pay this money doesn’t look good, in terms of investor confidence,” Kissy Agyeman-Togobo, a partner at Songhai Advisory LLP, which serves clients interested in Africa, said by telephone from London. “There is confusion as to who authorizes payment. Ouattara’s guys are saying there is no money at all because the money has been used for salaries. It’s going to an impact on Gbagbo, if he remains in power, and his ability to pay the military. It certainly does weaken his position and alienates him even further.”