Gabon's Eurobonds near six-month high

Gabon's Eurobonds were trading near their highest levels since April after a research note sparked optimism over the government's commitment and ability to repay a maturity due next year, investors told Reuters.

Leaders of the oil-rich West African nation, who took power in a 2023 coup that ousted nearly 60 years of rule by one family, have been searching for a strategy to manage the debt taken on by the previous regime.

Those bills include a $600 million Eurobond maturing in June 2025. That bond was trading at roughly 96.75 cents on the dollar on Wednesday, according to Tradeweb data, the strongest level since April and up more than 2 cents in the past week.

A note sent last week by research firm Jefferies, an excerpt of which was seen by Reuters, said a decision to pre-emptively buy back the debt, via issuing new country local debt and external funding, "comes from the very top of the leadership chain."

Financing plan

Jefferies declined to comment, as did Gabon's economy ministry.

Last month, Gabon's Economy Minister Mays Mouissi told Reuters that the government was working on a financing plan that included settling debts taken by the former regime.

"We have the responsibility to repay it ... Our country will be ready for the repayment of this Eurobond in June 2025," Mouissi said at the time.

But two investors who have met with Gabonese officials in recent weeks told Reuters it was unclear whether the government would do a buyback, and that it was still formulating its financial plan.

Regional reserves

The government can draw from regional reserves, one of the investors said, and could pay using a mixture of this and other money.

But government officials are focused on elections planned for next summer, and have struggled to articulate a clear plan to investors.

The government is also spending heavily in advance of the election, a point of concern for investors worried about whether it is off track in terms of getting cash from the International Monetary Fund.

Despite its oil wealth, Gabon has lower income per capita than in the 1970s, and relies on imports, including of food.

The IMF warned in May that fiscal imbalances widened significantly in recent years, pushing estimates of public debt to above 70% percent of GDP.

➤Click here to follow our WhatsApp channel for more stories.