Senegal opens subscription for 200bn CFA franc bond
TLDR
- Senegal opens subscriptions for treasury bonds worth 200 billion FCFA to finance the 2024 budget.
- The bonds will be sold in three tranches with varying rates and tenors.
- Investors from the region's eight-nation currency zone can participate in the bond sale.
Senegal has opened up subscriptions for its treasury bonds of 200 billion FCFA (around $330 million) to finance its 2024 budget. The bond, which is being sold with a unit of 10,000 FCFA, will be marketed from January 18 to February 7 to investors across the region's eight-nation currency zone.
The bonds will be offered in three tranches, with varying nominal annual rates and tenors: tranche A (FCFA 85 billion, 5 years at 6.25%), tranche B (FCFA 75 billion, 7 years at 6.45%), and tranche C (FCFA 40 billion, 10 years at 6.65%).
The subscription period for the bonds is subject to adjustments at the discretion of the Issuer, in consultation with the capital market regulator, AMF-UMOA. After issuance, the bonds will be sold on the BRVM.
Key Takeaways
Government bonds are often favored by investors due to their lower risk profile compared to assets like equities, given that the returns are guaranteed by the government. Senegal is particularly a frequent participant in the WAEMU public securities auction market, regularly issuing fungible treasury bonds and bills. In 2023, the government conducted a total of 44 issuances, comprising 23 fungible bond issuances and 21 fungible note issuances. While some market-related risks exist, holding onto bonds until maturity can effectively nullify these concerns. The government typically pays a fixed interest rate on bonds, and by remaining invested until maturity, investors can secure a consistent and guaranteed yield. Additionally, investing in government bonds can serve as a strategic move to diversify one's portfolio, as these instruments are generally stable and tend to perform well during periods when other asset classes face pressure.
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