Cameroon plans to raise CFA145 billion through a public bond issuance program from March 17 to March 31. The program includes six Treasury Bonds with varying maturities and interest rates, competing to attract investors in a challenging market. Despite rising costs, Cameroon retains the lowest borrowing rates in its monetary zone due to its reliability in debt repayment.
Starting March 17, Cameroon is set to initiate a public bond issuance program through the Bank of Central African States (BEAC). This program, running until March 31, aims to secure CFA145 billion from investors, as reported by the Treasury’s general directorate in the Ministry of Finance.
The issuance consists of six long-term Treasury Bonds (OTAs) with maturities ranging from 3 to 7 years. Each bond issuance is targeted to raise between CFA20 billion and CFA25 billion, with interest rates varying by maturity: 6% for 3-year bonds, 6.5% for 4-year bonds, 6.75% for 5-year bonds, and 7.5% for 7-year bonds.
This move reflects Cameroon’s commitment to offering competitive interest rates to attract investment, even amid increasing market demands. Historically cautious with interest rates, the government is adapting its approach in light of the evolving expectations for higher yields.
The changes in bond rates stem from BEAC’s monetary policy adjustments made in 2021 to address inflation, resulting in significantly higher borrowing costs for public debt.
Sylvester Moh, Director General of the Treasury, noted that in recent years, Cameroon was unique in sub-Saharan Africa for securing short-term bonds at rates below 3% and long-term bonds under 7%. However, interest rates for short-term Treasury Bonds surged from 2.67% in 2020 to 6.33% in 2024, more than doubling in four years, according to Finance Minister Louis Paul Motazé.
The average cost for issuing medium and long-term Treasury Bonds has also climbed, reaching 7.2% in September 2023— the highest rate since the BEAC’s public debt market began in 2011. Despite the rise in rates, Cameroon still retains the lowest borrowing costs in the Cemac monetary zone, attributed to its reputation for timely debt repayment. Minister Motazé emphasized that since the BEAC public debt market’s launch, Cameroon has never defaulted on payments.
Cameroon’s upcoming bond issuance program aims to raise CFA145 billion, offering competitive interest rates for varying maturities. This shift reflects a strategic adaptation to meet market demands for higher returns, amidst rising borrowing costs influenced by monetary policy changes. Although interest rates have increased significantly, Cameroon maintains the lowest borrowing costs within the Cemac monetary zone, thanks to its solid reputation for repaying debts.
Original Source: www.businessincameroon.com
