Cameroon Implements Public Bond Issuance to Raise CFA145 Billion

Cameroon’s Treasury is launching a bond issuance program aimed at raising CFA145 billion, with interest rates ranging from 6% to 7.5% depending on maturity duration. This initiative reflects a shift towards competitive rates in response to market demands and increased borrowing costs due to past monetary policy changes. Notably, Cameroon retains the lowest borrowing costs in the Cemac zone, attributed to its consistent debt repayment record.

As of March 17, Cameroon’s Treasury intends to begin a public bond issuance program through the Bank of Central African States (BEAC), concluding on March 31. This initiative seeks to secure a total of CFA145 billion from investors via six long-term Treasury Bond (OTA) issuances, with maturities ranging from 3 to 7 years. Each issuance aims to raise between CFA20 billion and CFA25 billion.

The interest rates for these bonds will vary: 6% for 3-year maturity, 6.5% for 4-year, 6.75% for 5-year, and 7.5% for 7-year bonds. This strategic move illustrates Cameroon’s commitment to attracting investment through competitive interest rates, adapting to the evolving market demands. Historically, the government has approached interest rate settings cautiously but has shifted its strategy in response to heightened expectations for returns.

The increase in bond rates follows monetary policy alterations by BEAC in 2021, aimed at curbing inflation, which in turn has led to higher borrowing costs associated with public debt. Previously, Cameroon was notably the only sub-Saharan African nation able to secure short-term bonds below 3% and long-term bonds under 7%.

Finance Minister Louis Paul Motazé disclosed during a presentation in Douala on February 13, 2025, that short-term Treasury Bond rates effectively more than doubled between 2020 and 2024, rising from 2.67% to 6.33%. Furthermore, the average cost of issuing medium and long-term bonds reached 7.2% in September 2023, the highest since the inception of the bond market in 2011.

Despite these increased rates, Cameroon still maintains the lowest borrowing costs within the Cemac monetary zone, largely attributed to its strong credit reputation as a reliable debtor. Minister Motazé highlighted the country’s track record, stating that since the establishment of the BEAC public debt market in 2011, Cameroon has consistently honored its debt obligations.

In summary, Cameroon is embarking on a substantial bond issuance program to raise CFA145 billion, offering varied interest rates across different maturities. This decision reflects its adaptive strategy in response to rising market expectations and monetary policy shifts. Despite increases in borrowing costs, Cameroon continues to enjoy favorable borrowing rates due to its commendable credit reputation and history of timely debt repayment.

Original Source: www.businessincameroon.com