(Business in Cameroon) - Investors based in Cameroon subscribed 77.5% of the XAF176.7 billion raised by Cameroon during its 2023 bond issue.  Based on the figures disclosed by the Ministry of Finance,  this amounts to XAF137 billion. The second largest country where subscriptions came from was Gabon, which accounted for XAF22.2 billion of the subscriptions or 12.6% of the overall amount. 

Next came countries like Equatorial Guinea with just over XAF6 billion (3.4%), Congo with XAF5.5 billion (3.14%), Chad with just over XAF5 billion (2.83%), and finally the Central African Republic with nearly XAF1 billion (0.57%). Overall, according to official figures, 99.99% of the subscriptions to Cameroon’s 2023 bond issue came from the CEMAC zone.

As usual, banks and financial institutions accounted for most of the subscriptions, with 64.08% or XAF113.2 billion. Non-banking companies invested XAF 41.3 billion in this operation, accounting for 23.41% of the total amount. Individual investors, on the other hand, subscribed for only XAF22.1 billion (12.51%).

Rush for short-term securities

For the issue on the sub-regional exchange (BVMAC), Cameroon initially planned to raise XAF200 billion. The target was eventually lowered to XAF150 billion due to challenging market conditions. To ensure the success of the operation, the Ministry of Finance negotiated a firm commitment of XAF 104 billion from the group of arrangers selected for the operation. This guaranteed 70% of the XAF 150 billion sought even before subscriptions opened on June 15, 2023 (it was closed on June 30, 2023).  

Given the rather unfavorable conditions in the sub-regional capital market, characterized notably by high-interest rates, the government, true to its cost-containment policy, decided to experiment with a multiple-rate bond for the first time in Central Africa. This type of operation gives investors the option to subscribe to long-term bonds with higher interest rates or short-term securities with lower interest rates. This flexible approach undoubtedly contributed to the success of the issue. 

According to figures from the Ministry of Finance,  investors favored short-term securities.  The 3-year bonds with a 5.8% interest rate were the most subscribed. For this category, Cameroon received XAF 79.3 billion in subscriptions, while only XAF40 billion was sought. At the same time, investors provided XAF61.6 billion in subscriptions to the 4-year bonds (6% coupon rate) while the country was seeking XAF40 billion with that type of bond. The 6-year and 8-year bonds, with 6.75% and 7.25% of interest rates respectively, received roughly half of the amounts targeted in subscriptions. With the 6-year bonds, Cameroon wanted to raise XAF 50 billion but received just 50% of the target in subscriptions. Meanwhile, the 8-year bond, through which the country wanted to raise XAF 20 billion, attracted just 53% of the target in subscriptions.  

Brice R. Mbodiam