Ivorian Bonds to Narrow Spread to South Africa's on Rating Upgrade
TLDR
- Ivory Coast upgraded to BB credit rating by S&P Global, aligning with Botswana and Mauritius.
- Despite the upgrade, Ivory Coast's Eurobonds for 2033 and 2037 experienced slight declines.
- Standard Chartered predicts narrowing spread between Ivory Coast and South Africa's dollar bonds with the rating upgrade.
Ivory Coast has emerged as one of sub-Saharan Africa’s top-rated sovereigns alongside Botswana and Mauritius after S&P Global upgraded its credit rating from BB- to BB, citing strong economic growth and shrinking budget deficits.
This marks a significant milestone, placing Ivory Coast ahead of South Africa’s average rating, which stands at BB-. Despite the upgrade, Ivory Coast's Eurobonds maturing in 2033 fell slightly by 0.1 cents to 91.74 cents on the dollar, while its 2037 bonds also declined by 0.1 cents to 99.94 cents.
The spread between Ivory Coast and South Africa’s dollar bonds is expected to narrow, according to Standard Chartered’s head of Africa strategy, Samir Gadio. He noted that while Ivory Coast bonds still offer a pick-up over South Africa’s, the rating upgrade provides room for the spread to tighten.
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Points clés à retenir
Ivory Coast’s credit rating upgrade to BB positions its bonds for a potential narrowing of the spread with South Africa’s dollar bonds. With strong economic fundamentals and reduced budget deficits, Ivory Coast’s bonds could attract more interest from investors, offering a yield premium over South Africa despite improved credit standing. Currently, South Africa’s dollar-denominated bonds due in 2032 offer a yield of 6.34%, compared to 7.62% for Ivory Coast’s 2033 bonds.
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