Cameroon is launching a public bond issuance program to secure CFA145 billion from March 17 to March 31, featuring six Treasury Bond issuances with maturities of 3 to 7 years. The government is offering competitive interest rates in response to market demands. Despite increasing borrowing costs, Cameroon sustains the lowest rates in the Cemac region, owing to its strong debt repayment history.
Beginning March 17, Cameroon’s Treasury is set to initiate a public bond issuance program through the Bank of Central African States (BEAC), aiming to raise CFA145 billion from investors by March 31. The program will comprise six long-term bond issuances, referred to as Treasury Bonds (OTAs), with maturities spanning from 3 to 7 years. Each issuance intends to generate between CFA20 billion and CFA25 billion, with interest rates varying from 6% for 3-year bonds to 7.5% for 7-year bonds.
The government’s decision to offer competitive interest rates is indicative of its intent to attract investors, challenging the increasingly demanding market conditions. Historically, Cameroon has approached interest rate settings with caution, but it has adapted its strategy in response to rising market expectations for enhanced returns.
The alteration in Cameroon’s bond rates is attributed to the monetary policy changes introduced by BEAC in 2021, targeting inflation. Consequently, public debt borrowing costs have seen a considerable increase. Previously, as noted by Sylvester Moh, Director General of Cameroon’s Treasury, Cameroon was unique in sub-Saharan Africa for borrowing at interest rates below 3% for short-term bonds and below 7% for long-term bonds.
During a presentation to investors in Douala on February 13, 2025, Finance Minister Louis Paul Motazé reported that short-term Treasury Bond interest rates more than doubled from 2.67% in 2020 to 6.33% in 2024, representing over a 100% increase. Furthermore, the average issuance cost of Cameroon’s medium and long-term Treasury Bonds has escalated, reaching 7.2% in September 2023, the highest since the market’s founding in 2011.
Notwithstanding the increase in interest rates, Cameroon maintains the lowest borrowing costs within the Cemac monetary zone due to its strong reputation for debt repayment. Minister Motazé emphasized that since the BEAC public debt market was established in 2011, Cameroon has consistently met its payment obligations on time and has never defaulted on its debts.
In summary, Cameroon’s Treasury is proactively engaging in a public bond issuance program to raise CFA145 billion, adjusting its interest rates to attract investors amid evolving market expectations. This initiative marks a significant shift in its financial strategy, reflecting the broader monetary policy changes influencing public borrowing costs. Despite rising rates, Cameroon maintains a favorable borrowing position within the Cemac monetary zone due to its impeccable debt repayment record.
Original Source: www.businessincameroon.com
