(Business in Cameroon) - Cameroon secured XAF176.7 billion in subscriptions for its 2023 bond issue, whose subscriptions were closed on June 30, 2023. The subscriptions exceeded the targets so,  “to satisfy all the investors who trusted its creditworthiness, the Republic of Cameroon requested and obtained the market regulator COSUMAF’s authorization to get the entire subscriptions allocated,” Finance Minister Louis Paul Motaze said in a release signed on July 4.  

Cameroon thus successfully completed its seventh bond issue on the sub-regional financial market despite market conditions becoming challenging in recent months. Indeed, to curb soaring inflation -spurred by various factors including the impacts of Covid-19 and the Russia-Ukraine conflict- in the CEMAC zone, the Central Bank (BEAC) adopted a restrictive monetary policy. It did so by withdrawing liquidity from the banking system and raising key interest rates, limiting access to bank financing. In that context, banks were more willing to lend to economic agents that agree to pay high-interest rates. 

To adapt its 2023 issue to the new realities, Cameroon decided to experiment with a multiple-rate bond, a first in the Central African region, while slightly increasing the coupon rates to attract investors. Doing so, gave investors the option to subscribe to long-term bonds that come with higher coupon rates or short-term securities with lower rates. This flexible approach undoubtedly contributed to the success of the operation. 

Truly, despite unfavorable market conditions, this success was to be anticipated. Indeed, at the opening of the subscription period, on June 13, 2023, the group of arrangers selected by Cameroon for that operation had made a firm commitment of XAF104 billion, or 70% of the target. The country thus needed to receive just XAF46 billion in subscriptions to complete its XAF150 billion target, which was ultimately exceeded. 

BRM