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10-Year Gabon Eurobond to Now Raise $750 Million

10-Year Gabon Eurobond to Now Raise $750 Million

From Reuters

Gabon expects to raise around $750 million through a 10-year Eurobond, according to the initial results of the combined bond buyback and new issue, which were released on Thursday.

The central African nation has offered to buy back up to $140 million of an outstanding 2017 Eurobond and to exchange the old bonds for the new issue. So far, bondholders have delivered $611 million for the new 2024 issue, the results show.

A roadshow for the deal ended in the United States on Wednesday. It is likely to price later on Thursday.

Gabon, rated BB- by Fitch and Standard and Poor’s, will use the proceeds of the new bond to fund transport and power infrastructure projects, according to a preliminary prospectus.

The country sold a debut $1 billion Eurobond in 2007. The 10-year, 8.2 percent bond, which was nearly 2 1/2 times oversubscribed, was issued to buy back old Paris Club debt.

Gabon set guidance for the new offering indicating a yield of around 6.5 percent, plus or minus 12.5 basis points, IFR, a Thomson Reuters news and analysis service, said on Wednesday. That is greater than the 3.5 percent yield at which the 2017 bond is trading, which is likely to be attractive to holders of that bond.

But new investors may demand a higher yield on the new issue, market participants said. The pricing on the 2017 bond reflects its ownership structure – it is held by a limited number of large investors and doesn’t trade much.

Written by Tosin Sulaiman | Read more at Reuters