Gabon’s bold eurobond move draws $920m despite high cost

Gabon has achieved its most substantial return to international markets in years, securing a $920 million Eurobond—well above its initial $750 million target. While this milestone underscores progress in the country’s external financing strategy, the elevated borrowing costs reveal lingering investor caution despite ongoing reforms.

Breaking records with a $920 million Eurobond issuance

On July 30, 2026, Gabon finalized terms for a $920 million Eurobond—a 22.7% increase over its initial $750 million goal. The transaction, expected to close by August 5, features a seven-year maturity with a three-year grace period where only interest payments are due before principal amortization begins.

The offering was heavily oversubscribed, with market indications pointing to demand exceeding $1 billion. This allowed Libreville to secure $920 million, exceeding its target by $170 million.

A step forward from Gabon’s 2025 bond placement

This year’s issuance significantly outperforms Gabon’s February 2025 private placement, which raised $570 million with a 2029 maturity and a 9.5% coupon. The new operation marks a 61.4% increase in borrowed funds and extends the maturity period from four to seven years, while slightly reducing the coupon to 9.375%.

However, the coupon alone doesn’t capture the full cost of the bond. Factors like issue price, investor yield requirements, and operational fees also impact the effective borrowing cost. In 2025, the bond was issued at par, resulting in a 12.7% initial yield. The effective yield and issue price for this year’s Eurobond remain undisclosed, making a precise cost comparison impossible at this stage.

Unlike the 2025 operation—which primarily refinanced a maturing Eurobond due in June—no debt buyback has been announced this time. The bulk of the funds will directly support state financing needs after accounting for placement commissions and fees.

Ambitious but pricier than Cameroon’s bond

While Gabon’s bond stands out for its scale, Cameroon’s recent issuance offers a different structure. Cameroon secured two years of grace and implemented a dollar-euro swap to mitigate exchange rate risks for a country pegged to the euro, lowering its effective cost to 7.79% in euros. Gabon’s 9.375% coupon remains higher, though a direct comparison awaits the disclosure of Gabon’s effective yield.

For Libreville, the primary achievements lie in mobilizing larger funds, extending maturity, and avoiding simultaneous refinancing—not in significantly reducing borrowing costs.

Moody’s maintains pressure with ‘Caa2’ rating

The Eurobond launch follows Moody’s decision to maintain Gabon’s sovereign rating at ‘Caa2’ while shifting 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 investor expectations of high risk premiums despite the bond’s commercial success. This suggests that while markets are open to Gabon, financing comes at a premium.

Funds to fuel public investments and clear arrears

Gabon’s government plans to allocate proceeds from the Eurobond to public investment projects and settle arrears, primarily external and multilateral commercial obligations rather than domestic business debts. The issuance represents 61% of the $1.5 billion international borrowing ceiling set by the revised 2026 finance law, leaving roughly $580 million in untapped capacity.

Notably, the law allowed for a maximum 10-year maturity, yet Gabon secured only seven years—a discrepancy authorities have not addressed.

A strategic move ahead of IMF negotiations

Prepared with a preliminary prospectus published on July 27 and led by Finance Minister Thierry Minko, the Eurobond issuance signals renewed investor confidence in Gabon’s reform trajectory and creditworthiness. This perception could be bolstered by an upcoming IMF mission to Libreville in September, aiming to finalize an economic and financial program before year-end.

Despite this commercial success, Gabon faces a persistent challenge: reopening access to international markets comes at the cost of high-risk premiums, underscoring the fragility of its economic recovery.