(Bloomberg) -- Gabon’s dollar bonds maturing 2025 rose to a six-month high Wednesday, extending gains triggered by a report that the government is considering buying back the securities.
The $700 million issue is trading at about 97.20 cents in the dollar, taking the yield to about 12%, down from 16.8% at the end of September. The gains have also rippled over to Gabon’s other dollar bonds, with all three issues averaging a 5% return so far this month. That contrasts with a 1.1% loss on Bloomberg index of hard-currency emerging-market debt.
The moves follow a report issued by Jefferies analysts after they visited the junta-led central African nation. In an extract seen by Bloomberg News, the note said authorities are exploring an early buyback of the bond, using a combination of local and external funding. The decision is being considered at the highest levels of the government, it added.
Representatives of Gabon’s finance ministry declined to comment. Jefferies declined to comment.
The turnaround in the bond comes just months after Gabon met with investors to reassure them about its creditworthiness. The securities had sold off on fears that budget constraints in the wake of a 2023 coup could lead to default.
A recent rise in oil output could help Gabon finance a bond buyback, especially after offshore drilling successes in the OPEC member state, according to Matthew Greenman, an emerging markets sovereign credit analyst at Thrivent.
With tax revenues surpassing 2024 budget targets, the government also has sufficient fiscal room, he said.
“Terms of trade have also been favorable this year, with above-forecast selling prices for Gabon’s two largest exports — oil and manganese — further supporting external liquidity in the near-term,” Greenman added.
--With assistance from Katarina Höije and Kerim Karakaya.
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