Cameroon Launches Public Bond Issuance to Raise CFA145 Billion

Cameroon plans a public bond issuance from March 17 to March 31, 2025, aiming to secure CFA145 billion. The initiative features six long-term bonds with interest rates between 6% and 7.5%. Adjustments in interest rates reflect market demands and BEAC’s monetary policy changes to manage inflation. Despite rising rates, Cameroon retains the lowest borrowing costs in the Cemac zone with a robust repayment record.

Cameroon is embarking on a public bond issuance program from March 17 to March 31, 2025, aiming to raise CFA145 billion. This initiative, managed by the Bank of Central African States (BEAC), will include six long-term Treasury Bonds (OTAs) with varying maturities between 3 to 7 years, each targeting CFA20 billion to CFA25 billion. The proposed interest rates will be 6% for 3-year bonds, increasing incrementally to 7.5% for the 7-year bonds.

This issuance signifies Cameroon’s strategy to present competitive interest rates to attract investors amidst evolving market conditions, having historically maintained a conservative approach towards interest rates. The government’s pivot towards higher returns is a response to augmented investor expectations in recent years.

The interest rate adjustments stem from BEAC’s monetary policy shifts introduced in 2021, aimed at controlling inflation, which has subsequently led to increased borrowing costs for public debt. Previously, as noted by Sylvester Moh, Cameroon distinguished itself as the only sub-Saharan African nation with borrowing rates below 3% for short-term and below 7% for long-term bonds.

Presently, Finance Minister Louis Paul Motazé disclosed that rates on short-term Treasury Bonds surged from 2.67% in 2020 to 6.33% in 2024, marking a substantial increase. Additionally, costs for longer-maturity bonds have climbed, reaching 7.2% in September 2023, the highest level since the BEAC public debt market’s inception in 2011.

Even with the recent interest rate hike, Cameroon continues to enjoy the lowest borrowing costs in the Cemac monetary zone, underpinned by its consistent debt repayment history. Minister Motazé emphasized that since launching the BEAC public debt market in 2011, the country has never defaulted on its payment obligations.

In conclusion, Cameroon’s public bond issuance program represents a strategic response to investor demand for higher returns amidst changing market dynamics. With varied interest rates and a commitment to honoring its financial obligations, Cameroon maintains a favorable position in the Cemac monetary zone despite rising borrowing costs.

Original Source: www.businessincameroon.com