(Ecofin Agency) - The operation will involve two bonds with 5- and 8-year maturities, offering fixed rates of 6.50% and 6.80%, to fund public projects. Burkina Faso's budget deficit is projected at 4.9% of GDP in 2024, while public debt has exceeded CFA7,313 billion, largely due to security-related expenses.

Burkina Faso is seeking CFA100 billion, equivalent to $165 million, on the WAEMU regional market. From October 24 to November 14, 2024, the country’s public treasury will offer two bonds with fixed rates of 6.50% and 6.80% and maturity periods of five and eight years.

The funds raised will support investments outlined in the 2024 state budget, as approved by the Ministry of Economy and Finance on October 11. The bond issue will be split into two parts: the first, a CFA60 billion tranche with a five-year maturity and a two-year grace period, and the second, a CFA40 billion tranche with an eight-year maturity and a three-year grace period.

This bond issue will be placed through syndication, coordinated by Coris Bourse, acting as the lead arranger and head of the placement syndicate, with BIBE Finance & Securities as the co-lead. The issuance is organized through the syndication compartment, a system different from UMOA-Titres' standard auction-based debt financing.

The need for financing, which is expected to reach 4.9% of Burkina Faso’s GDP in 2024, highlights the importance of this operation. The government aims for a 5% economic growth rate in 2024, up from 3.6% in 2023, despite ongoing security and political challenges. Funds from this issue will mainly support public investment projects in infrastructure and essential services, critical for the country’s development and security stability. Burkina Faso’s public debt stood at CFA7,313 billion as of June 30, 2024, representing 62.4% of GDP, which remains below the regional threshold of 70%.

Burkina Faso has previously achieved success with bond syndications regulated by the WAEMU Capital Markets Authority. Between 2003 and September 2024, the country raised around CFA2,083 billion, often surpassing target amounts. In its last syndication in May 2024, Burkina Faso raised nearly CFA130 billion, exceeding its CFA120 billion target with maturities of 5 to 7 years and interest rates between 6.30% and 6.55%, despite tightening market conditions.

The country has also raised CFA662 billion through UMOA-Titres auctions this year, with recent yields reaching 8.63% on five-year bonds and 8.17% on seven-year bonds, significantly higher than the rates offered in the current operation. The two new bonds will be listed on the Regional Stock Exchange (BRVM), with semi-annual repayments that include both coupon and capital portions after the grace periods.