Oil Rise Makes Gabon Bonds Emerging Markets’ Most Profitable

  • Yield on dollar debt poised for biggest ever monthly drop
  • Exotix may review sell recommendation with oil above $60

Gabon’s bonds this month have returned more than any other dollar-denominated sovereign notes in emerging markets.

The nation’s $1.5 billion bonds due December 2024 advanced as oil, which accounted for more than a third of government revenue last year, rose above $55 a barrel for the first time in about 17 months. Brent crude prices have risen almost 20 percent since OPEC members agreed to trim output for the first time in eight years.

“If oil goes towards the $60 level, then that would help solve the macro context,” and the firm would consider amending its sell recommendation on the bonds, Stuart Culverhouse said, the chief economist at Exotic Partners LLP who downgraded his outlook on Mozambique’s debt less than two weeks before they plunged in October.

Gabon’s 6.375 percent bonds have returned 6.2 percent in December as the yield fell 98 basis points, poised for the steepest ever monthly drop, to 7.57 percent as of 11:53 a.m. in London.

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