Senegal plans to issue a $500 million 10-year Eurobond this year at an interest rate of about 6 percent, the International Monetary Fund said in a report published on Tuesday.
The IMF said the bond would enable the West African nation to close its financing gap and reduce its reliance on costly short-term financing from the regional market.
"The government is expected to issue a new 10-year, $500 million Eurobond this year at an interest rate of about 6 percent, in line with current yields on the 2011 Eurobond," the IMF said in its report.
Authorities in Senegal were not available for comment. Senegal is among the few African countries that have tapped international markets with a Eurobond.
It issued its first $200 million 5-year Eurobond in December 2009 at a yield of 9.25 percent. The bond's size was increased to $500 million in a second issue to replace the first one in 2011, which also extended the maturity to 10 years.
Samir Gadio, a London-based emerging markets strategist at Standard Bank, said a 6 percent yield looked increasingly unrealistic because market conditions have deteriorated in recent days.
Yields on emerging market debt have been driven sharply higher since U.S. Federal Reserve Chairman Ben Bernanke sketched out plans last week to gradually withdraw the central bank's massive bond-purchasing programme as the U.S. economy strengthens.
"The Senegalese (2011) Eurobond was trading at 5.5 percent in early May. The yield is now 8.4 percent," Gadio said.
"If they were to issue today, they would probably pay slightly more than the rate of the 2011 bond. Since they're thinking about the fall it could be that they pay slightly below the 2011 rate, but even that is not necessarily a given."
Standard & Poor's credit rating for Senegal stands at B+. Moody's rating for Senegal sovereign debt is B1.
Source: IMF, Reuters
