Gabon secures $920 million eurobond with high borrowing costs

Gabon has achieved a remarkable milestone in its external financing strategy, securing a $920 million Eurobond—well beyond its initial target. While this marks the country’s most significant return to international markets in years, the elevated borrowing costs reveal lingering investor caution despite ongoing reforms.

Record-breaking bond issuance surpasses expectations

On July 30, 2026, Gabon finalized terms for a $920 million Eurobond—a 22.7% increase over the original $750 million goal. Official statements indicate settlement is expected by August 5, with bonds maturing in 2033 after a seven-year term, including three years of grace where only interest payments are required before principal repayment begins.

The issuance was significantly oversubscribed, with market indications suggesting demand exceeding $1 billion. This allowed authorities to secure $920 million—$170 million above the target amount.

Progress compared to 2025 issuance

This new bond outperforms Gabon’s previous private placement in February 2025, which raised $570 million at a 9.5% coupon with a 2029 maturity. Over the past year, the borrowed amount increased by 61.4%, while maturity extended from four to seven years. The coupon rate decreased slightly to 9.375%, a 12.5 basis point reduction.

However, the coupon alone doesn’t reflect the true cost of borrowing. Other factors—including issuance price, investor yield demands, and operational fees—play a crucial role. In 2025, the bond was issued at par, resulting in a 12.7% initial yield. The pricing and effective yield for the 2026 Eurobond remain undisclosed, making a precise financial comparison impossible at this stage.

Unlike the 2025 operation—which primarily refinanced an existing Eurobond maturing in June—no debt buybacks have been announced this time. This suggests a larger portion of funds will directly support state financing needs after accounting for placement fees and commissions.

More ambitious than Cameroon but pricier

While Gabon’s bond achieved a higher total issuance, Cameroon’s recent Eurobond benefits from a two-year grace period and a dollar-euro swap mechanism. This financial tool converts dollar payments into euros, reducing currency risk for a country pegged to the euro. Cameroonian authorities report an effective cost of 7.79% in euros—well below Gabon’s 9.375% coupon. However, a full comparison requires disclosure of Gabon’s effective yield.

For Libreville, the key improvements lie in the increased funds raised, extended maturity, and absence of simultaneous refinancing—not necessarily in reduced borrowing costs.

Moody’s maintains pressure on Gabon’s credit rating

The Eurobond issuance follows Moody’s decision to maintain Gabon’s sovereign rating at Caa2, while downgrading its outlook from stable to negative. The agency cited substantial financing needs, limited access to financial resources, and risks of further debt restructuring or refinancing.

The 9.375% coupon reflects persistent investor concerns, despite strong commercial success. Markets continue demanding high risk premiums to finance Gabon’s debt obligations.

Funds allocated to investments and arrears

Government officials state proceeds will finance public investment projects and settle outstanding obligations, primarily external and multilateral commercial commitments rather than domestic business debts. The $920 million raised represents 61% of the 1.5 billion dollar international borrowing ceiling set in the revised 2026 budget law enacted July 17.

With roughly $580 million still available under the ceiling, no additional issuance has been announced. The law initially allowed for maturities up to ten years, though Gabon secured only seven-year terms—an unexplained discrepancy by authorities.

A strategic signal to the IMF

Prepared with a preliminary prospectus published July 27 and led by Finance Minister Thierry Minko, this Eurobond serves as a message to international markets. Authorities view it as proof of renewed investor confidence in Gabon’s economic trajectory and reform progress.

This perception may strengthen as Gabon advances toward an expected agreement with the International Monetary Fund. Technical discussions continue, with an IMF mission scheduled for Libreville in September to finalize an economic and financial program before year-end 2026.

Despite this commercial success, Gabon faces a persistent challenge: international market access comes at a steep price, reflecting ongoing risk concerns.