Yields climbing on Cote d’Ivoire international $2.3 bn bond

Markets are nervous about the Cote d’Ivoire bond, worried that the country may not meet a payment deadline. Reuters reports today (27 December): “Ivory Coast’s $2.3 billion bond due in 2032 fell to a record low last week as investors worried the country would not meet a $30 million bond payment.”
Chaos and civil war is threatening as 3 West African presidents flew in to tell former president Laurent Gbagbo that he should leave or the country’s neighbours could use “legitimate force” to shift him. He retaliated by warning of war this morning, according to a VOA report. The 28 November election was internationally held to be won by Alassane Ouattara but a crisis was sparked on 21 December as Gbagbo supporters over-ruled the results and he refused to go. Outtara is in a hotel, protected by UN peacekeeping troops who have refused Gbagbo’s threat and stayed on in the country.
There have already been clashes which have left 200 dead and death squads and kidnappers are targeting Ouattara supporters.
The West African central bank for the CFA zone last week cut Gbagbo from Ivorian accounts, making it hard for him to continue paying the wages of the military, a key in his bid to cling to power at all cost to his countrypeople and the region.
The World Bank has frozen some $800 million in committed financing. Turmoil has pushed cocoa prices to 4-month highs, disrupting export registrations and raising fears that fighting could block transport and shipping.
By 21 December, the dollar-denominated 2.5% bonds had fallen for a 4th day as investors bid 44.25 cents on the dollar, down from a close of 46.06 on 20 December, according to data compiled by Bloomberg. It was the lowest since the bonds were issued and the yield hit a record 14.479% from 13.943%.
Stuart Culverhouse, chief economist at brokerage Exotix Ltd. (www.exotix.co.uk) told Bloomberg: “People are just getting a little bit anxious” on 21 December, forecasting that the bond could fall as low as 42 cents on the dollar, raising the yield to about 15%, with the prospect of a rebound if there is an indication that Gbagbo will step down: “If there is some positive noise and some action, then the bonds will recover to the low 50s.”


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