International, domestic bonds likely in Gabon-S&P
by Carolyn Cohn

Reuters    Translate This Article
9 November 2007

LONDON, Nov 9 (Reuters) - Gabon is likely to issue international and domestic bonds to refinance Paris club debt following the African country's newly-assigned rating, a Standard & Poor's analyst said on Friday.

Standard & Poor's this week assigned a debut BB minus long-term rating to oil-rich Gabon, citing the country's strong balance sheet and relative wealth.

Fitch also assigned a BB minus rating to Gabon last month.

The government is finalising an agreement with the Paris Club of creditor countries in which it will buy back 86 percent of outstanding debt to club members, S&P said.

'The Paris club debt buy-back deal totals around $1.5 billion. A $1 billion global bond will finance part of that, but Gabon also plans issuance in the local capital markets,' Sarah N'Sonde, credit analyst at S&P, told Reuters.

Gabon has mandated Citi and JP Morgan to lead manage a $1 billion 10-year global bond which is likely to launch in the next few weeks, market sources told Reuters this week.

There is increasing interest among investors in buying African assets, particularly as the strength of conventional emerging markets has led to tighter yield spreads over U.S. Treasuries.

A recent $750 million 10-year Eurobond for B-plus rated Ghana, the first bond for a sub-Saharan African country outside South Africa, was almost four times oversubscribed.

B-plus rated Kenya has also said it is planning a $300 million Eurobond.

Gabon's higher rating could be an added attraction for investors, analysts said.

'Gabon is clearly a wealthier economy compared to many of the other countries we rate in sub-Saharan Africa,' said N'Sonde.

'Gabon has achieved far more in domestic economic reforms, and has done a lot of privatisation. Gabon is comparable with other oil-producing countries like Nigeria which also has a strong balance sheet.' Nigeria is also rated BB minus by S&P.

African countries have been developing local capital markets, often with help from international bodies like the International Monetary Fund.

The African Development Bank has also been issuing bonds in local currencies, including the Nigerian naira and Tanzanian shilling.

Gabon's rating will make it easier for the country, one of Africa's richest thanks to oil wealth, to bring in foreign capital, N'Sonde said.

'The (Gabonese) authorities are working hard to attract foreign investment, the rating is of course an important step in improving visibility and financial transparency.' (Reporting by Carolyn Cohn; Editing by Ron Askew)

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