FrancTrade view: The recent rally in the US dollar makes it less compelling for Cote d’Ivoire to re-enter the Eurobond market although, according to officials, the prospect of raising debt offshore has not been abandoned. A recovery in cocoa output in the country should give policy makers, and indeed investors, some comfort although improving supply will limit price upside.
The government of Côte d’Ivoire has pulled out of plans to issue a Eurobond, targeted at offshore investors, and may instead look to raise up to XOF 550bn (USD 975mn) on the regional market, contingent on liquidity. According to finance minister, Adama Kone, the recent rally in the US dollar makes it less compelling to raise dollar-denominated debt. Côte d’Ivoire has already raised USD 1.75bn on the international Eurobond market since 2014.
Public finances may be vulnerable to changes in the vastly important cocoa sector and won’t have been helped by moderately weaker output in the 2015/16 season. Cocoa output in Côte d’Ivoire this season has been undermined by dry El Niño weather which has shrunk yields, resulting in a 6% y/y drop in output to around 1.7 million tonnes in the season to September 30. Policymakers will be keeping a watchful eye on cocoa prices, which may now be pressured lower should output recover as expected in 2016/17.