Gabon secures $920m eurobond amid investor caution

Gabon has achieved a significant milestone in its external financing strategy by raising 920 million dollars on international markets, far exceeding initial expectations. While this Eurobond issuance marks the country’s most substantial return to global markets in years, the borrowing cost remains steep—a clear sign that investor confidence, though improving, remains cautious despite ongoing reforms.

Record-breaking issuance surpasses targets

On July 30, 2026, Gabon finalized the terms of its 920 million dollar Eurobond—a figure 22.7% higher than the initial 750 million dollar target. The placement was finalized with strong demand, with indications suggesting subscriptions exceeding 1 billion dollars, allowing Libreville to secure 920 million while rejecting excess offers.

The bonds, scheduled for settlement around August 5, will mature in 2033 after a seven-year term, including a three-year grace period during which only interest payments will be made before principal amortization begins.

Progress compared to 2025 issuance

This latest operation represents a substantial improvement over Gabon’s February 2025 private placement, which raised 570 million dollars with a 2029 maturity and a 9.5% coupon. Over the past year, the borrowed amount has surged by 61.4%, while maturity extended from four to seven years. The coupon rate decreased slightly to 9.375%, marking a 12.5 basis point reduction.

However, these figures alone do not reflect the true cost of borrowing. The actual expense depends on the bond’s issue price, investor yield requirements, and associated fees. In 2025, the bond was issued at par value, resulting in a 12.7% initial yield. The effective price and yield of this year’s Eurobond have yet to be disclosed, making a precise financial comparison impossible at this stage.

A key distinction from the 2025 operation is the absence of debt refinancing. The 2025 issuance primarily served to refinance a maturing Eurobond in June, whereas this year’s funds are expected to directly support state financing needs after accounting for placement fees and commissions.

More ambitious than Cameroon but costlier

Gabon’s issuance stands out in scale compared to Cameroon’s recent Eurobond, though the latter benefits from a more favorable financial structure. Cameroon secured two years of grace and implemented a dollar-to-euro swap mechanism, converting dollar payments into euros to mitigate exchange rate risks for a country pegged to the euro. This arrangement reduces Cameroon’s effective borrowing cost to 7.79% in euros—significantly lower than Gabon’s 9.375% coupon. However, a full comparison remains pending until Gabon’s effective yield is disclosed.

For Libreville, the primary achievements lie in the increased funds raised, extended maturity period, and the absence of simultaneous refinancing rather than a substantial reduction in financing costs.

Moody’s maintains cautious stance

This issuance follows Moody’s decision to maintain Gabon’s sovereign credit rating at Caa2 while downgrading its outlook from stable to negative. The agency cites Gabon’s substantial financing needs, limited access to financial resources, and risks of further debt restructuring or refinancing as key concerns.

The 9.375% coupon underscores that despite the commercial success of the operation, investors continue to demand high returns to finance Gabon’s debt, reflecting persistent risk premiums.

Funds to drive investments and clear arrears

According to official documentation, the net proceeds from this Eurobond will primarily finance public investment projects and settle external commercial and multilateral arrears—excluding liabilities owed to local businesses. The funds raised represent approximately 61% of the 857.9 billion FCFA (about 1.5 billion dollars) borrowing ceiling set by the revised 2026 finance law, leaving around 580 million dollars in untapped capacity. No additional issuance has been announced yet.

The law also allowed for a maximum maturity of ten years, though Gabon secured only seven years—a discrepancy authorities have not addressed.

Signaling progress ahead of IMF talks

Prepared following a preliminary prospectus published on July 27 and led by Finance Minister Thierry Minko, this issuance sends a strong signal to international markets. The government views it as evidence of renewed investor confidence in Gabon’s reform trajectory and economic outlook.

This perception may be reinforced by ongoing negotiations with the International Monetary Fund (IMF). Technical discussions are underway, with an IMF mission expected in Libreville in September to finalize an economic and financial program before the end of 2026.

Despite this commercial success, Gabon faces a persistent reality: reaccessing international markets comes at a premium, reflecting lingering risk perceptions.