Ivory Coast Sells Post-Default Eurobond for Less Than Kenya

Ivory Coast sold $750 million of 10-year bonds today after borrowing costs of the West African nation that defaulted on debt in 2011 dropped to record lows.

The country priced the securities due in 2024 to yield 5.625 percent. The sale comes after Kenya sold $1.5 billion last month of debt due in June 2024 at 6.875 percent. Those securities yielded 6.05 percent today.

The world’s biggest cocoa producer is joining African countries from Kenya to South Africa seeking to tap debt markets as borrowing costs tumble. The government is testing appetite for its debt less than four years after defaulting on $2.3 billion of bonds as its economy is set to grow 8.2 percent this year, according to International Monetary Fund estimates. That exceeds the sub-Saharan Africa average of 5.4 percent.

“When countries like the Ivory Coast, which defaulted on debt relatively recently, are able to attract demand for their debt, it is clear that investor sentiment is exceedingly bullish,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail.

Government bonds due in December 2032 rallied for a seventh day, sending the yield down four basis points to a record low 5.88 percent at 2:50 p.m. in New York. The country revised the payment schedule on its defaulted notes in 2012, and its economy is recovering as cocoa production surges and coffee output climbs, helping boost government revenue.

Africa Sales

The bond sale received about $4.75 billion in bids, with the majority of investors hailing from the U.S. and U.K., said Nicholas Samara, the London-based vice president for Central and Eastern Europe, Middle East and Africa debt capital markets at Citigroup Inc.

“Markets will be beneficial for issuers for the next several months and I expect to see many sovereigns from Africa take advantage in order to fund specific projects and promote further growth,” Samara said by phone. “That is not to say that fundamentals are not important, investors are looking very carefully at fundamentals.”

South Africa picked banks for an offering of 12-year and 30-year dollar notes, which may price tomorrow, according to a person with knowledge of the plan. Senegal is marketing benchmark-sized dollar-denominated bonds to investors in U.S. and Europe this week and next, a separate person said.

Before it's here, it's on the Bloomberg Terminal.