GABON: The spotlight in the African eurobond market was on Gabon yesterday as its debt prices plunged after the military announced it had seized power.
A group of senior military officers said they had seized power, overturning the results of a presidential vote shortly after the election committee announced that President Ali Bongo had won a third term. The announcement spooked investors in its oil sector and its debt linked to conservation projects. Specifically, the US dollar-denominated bonds were down by more than 8.0 percent yesterday.
The slump in eurobond prices largely reflects heightened uncertainty over whether the policies and commitments made by the ousted administration will be maintained going forward. Meanwhile, an immediate risk to bondholders will be whether sanctions are imposed. The sell-off will also concern investors who had taken part in the country’s recent debt-for-nature swap, an increasingly popular means of fund-raising for countries committing to environmental protection. (ETM)