News Column

Positive rating for Ivory Coast

July 10, 2014

LONDON: Credit ratings agency Moody's assigned Ivory Coast a first-time rating of B1 with a positive outlook, citing high growth prospects but also flagging its low per capita income and weak governance |indicators.

Moody's assigned the same rating, which ranks Ivory Coast four notches below investment-grade, to the country's planned $500-million |(R5.3-billion) Eurobond, it said in a statement published on its website on Tuesday.

The country is awaiting a second rating from Fitch.

Ivory Coast is emerging from a decade-long political crisis that ended in a brief 2011 civil war and its economy - French-speaking West Africa's largest - is reviving, with GDP growth of about 9 percent expected for this year.

The government of President Alassane Ouattara, pictured, is investing heavily in renewing long-neglected infrastructure.

The new bond, which is expected to be issued this month, will mark Ivory Coast's first venture on to the international capital markets since it defaulted on its previous Eurobond during the war three years ago.

Basing its projections on an anticipated B+ rating, BofA Merrill Lynch Global Research wrote in a report on Wednesday that it expected yields of 5.3-5.9 percent for a five-year issue, or 5.9-6.2 percent for a 10-year bond.

Moody's B1 rating corresponds to a B+ rating with Fitch or Standard & Poor's.

"The government has cleared a large amount of arrears and embarked on a coherent programme of structural reform over a period of relative good stability and growth," the research report said. "Politics and commodity prices remain a risk."

The government resumed coupon payments on the defaulted $2.5bn Eurobond, which matures in 2032, after securing $4bn in debt relief in June 2012 under an IMF-World Bank scheme. It has since emerged as one of non-oil producing Africa's best-performing credits.

An Ivorian government delegation including Prime Minister Daniel Kablan Duncan and finance ministry officials launched a roadshow for the bond yesterday. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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