• Offers bonds due in 2025 with three equal redemptions
  • Cameroon initial price talk seen at 9.75 percent area

Cameroon is testing international capital markets with a debut dollar bond as it looks to finance investment projects including the energy sector.

The Central African nation is offering notes due in November of 2025 at about 9.75 percent, according to a person familiar with the matter who asked not to be identified because the information is private. The bond will have three equal redemption payments in November of 2023, 2024 and 2025, the person said.

Cameroon joins African countries from Angola to Gabon that raised $7.5 billion in Eurobonds this year, compared with $8 billion in 2014. The continent’s nations are tapping the dollar market ahead of an expected U.S. Federal Reserve rate hike next month which will increase borrowing costs for developing nations.

“It looks attractive at initial price talk, but I would expect that guidance to tighten,” said Mark Baker, who helps oversee $1.5 billion in emerging-market debt at Standard Life Investments Ltd. in London. “This is a challenging environment for sub-Saharan governments as low commodity prices weigh on fiscal accounts and the wider global backdrop remains uncertain.”

Cameroon curbed spending and boosted borrowing this year as the price of oil, its biggest export, plunged. President Paul Biya said he will spend about $1 billion as part of a three-year emergency program to boost economic growth. Cameroon will also use the funds to repay a bridge loan for state-owned oil refinery Sonara, Standard & Poor’s said on Nov. 5.

“The yields on recent bonds launched by Ghana and Angola make it clear that the period of ultra low yields on African Eurobond debt has ended,” John Ashbourne, an Africa economist at London-based Capital Economics Ltd., said Nov. 11 by e-mail.

Ghana priced its 2030 bonds at 10.75 percent last month while Angola sold its 2025 note at 9.5 percent earlier in November. Zambia which is rated at B by S&P, five levels below investment grade, the same as Cameroon, raised $1.25 billion in bonds maturing in 2027 at 9.375 percent in July.

Societe Generale CIB and Standard Chartered Bank are organizing the sale.

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