* Capital to go towards transport, power sectors
* Sets minimum yield of 6.125 pct for new Eurobond
* Gabon debt seen less attractive than Nigeria, Angola
By Tosin Sulaiman
JOHANNESBURG, Dec 2 Gabon plans to raise at
least $500 million via a new 10-year Eurobond to fund
infrastructure investment and will buy back up to $140 million
of its 2017 Eurobond, according to a preliminary prospectus seen
The mineral-rich central African nation was one of the first
sub-Saharan countries to make its debut on the
dollar-denominated debt market when it issued a $1 billion
Eurobond in 2007 with an 8.2 percent coupon. Others that have
followed since including Nigeria, Cote d'Ivoire, Zambia and
Gabon, rated BB- by Fitch and Standard and Poor's, has
nearly $875 million of the 2017 bond outstanding and is offering
to buy $140 million of that for cash.
It will also offer investors the opportunity to exchange any
or all of the remaining amount for the new issue. Its aim is to
extend the maturity profile of its debt and to reduce its
International bond issuance by African sovereigns has
reached a record high $8 billion this year, according to a
report by Moody's published in October, as countries seek
cheaper sources of funding for infrastructure projects.
Many African Eurobonds have been oversubscribed by investors
seeking high-growth markets and looking to diversify their
portfolios away from the developed world.
While Gabon's exchange offer is seen as attractive for
existing note holders, Samir Gadio at Standard Bank said that
new investors may favour Nigeria or Angola.
"Frankly if you had to make a choice between the three oil
producers in sub-Saharan Africa with Eurobonds, it wouldn't be
Gabon on a yield-adjusted basis," Gadio said on Monday.
Gabon made a late payment on its Eurobond coupon in June
2012 after a dispute with a South African company that had
frozen bond payment funds via a court order, but avoided falling
It was the second time Gabon was forced to delay payouts to
bondholders, following a previous case in 2008.
Proceeds of the new bond will be used to fund infrastructure
projects in the transport and power sectors, the prospectus
said. Those include development of a bypass road and a dam and
completion of a road connecting the capital Libreville with the
city of Franceville.
The projects are part of the government's public investment
programme begun in 2009 to diversify the economy away from oil,
which accounts for 40.5 percent of Gabon's GDP.
The country's resource wealth and small population of about
1.6 million mean it has one of the highest per capita incomes in
sub-Saharan Africa, but inequality is high and large numbers of
people remain mired in poverty.
The IMF projects GDP growth of 6.6 percent in 2013 and 6.8
percent next year.
The 2017 bond, issued to fund a buyback of
old Paris Club debt, is currently trading with a yield of around
Gabon set a minimum yield of 6.125 percent on the upcoming
Eurobond, according to a government notice. The deadline for the
exchange offer is 1000 GMT on Dec. 4., it said.
An investor roadshow will end in the United States on
Wednesday and the bond could be issued towards the end of the
Citigroup, Deutsche Bank and Standard
Chartered are the lead managers.