Gabon secures $920m eurobond amid investor caution

Libreville’s latest international fundraising effort has exceeded projections, raising $920 million through an Eurobond issuance. While this marks the largest return to global debt markets in years, the hefty borrowing costs underscore lingering investor skepticism despite ongoing reforms.

The Gabonese government has once again tapped into international capital markets, this time securing a substantial $920 million (approximately 524 billion XAF) through an Eurobond issuance. This figure surpasses the initial target of $750 million by a significant margin, demonstrating robust demand from global investors.

Breaking records with a $920m Eurobond

On July 30, 2026, Gabon finalized the terms of its latest Eurobond, securing $920 million—well above the initial $750 million target. The issuance, expected to settle around August 5th, carries a seven-year maturity with a three-year grace period before principal repayments begin. During the grace period, only interest payments will be made, easing immediate debt servicing pressure.

The transaction was significantly oversubscribed, with market indications suggesting demand exceeded $1 billion. This strong appetite allowed Gabon to secure more funding than originally planned, ultimately raising 170 million dollars above the initial goal.

Progress compared to 2025, but costs remain high

This year’s Eurobond represents a notable improvement over Gabon’s previous private placement in February 2025. At that time, the country raised $570 million with a 2029 maturity and a 9.5% coupon rate. The new issuance increases the borrowed amount by 61.4% while extending the maturity from four to seven years. The coupon rate has also decreased slightly to 9.375%, a reduction of 12.5 basis points.

However, the coupon rate alone does not reflect the true cost of borrowing. The effective yield depends on the issuance price, investor demands, and associated fees. In 2025, the bond was issued at par, resulting in an initial yield of 12.7%. The final yield and issuance price for the new Eurobond have not yet been disclosed, making it difficult to assess the full financial benefit of this year’s operation.

Unlike the 2025 issuance, which was primarily used to refinance an upcoming Eurobond maturing in June, no debt buyback was announced this time. This means a larger portion of the funds will directly support state financing needs after accounting for placement fees and commissions.

Higher ambition, but higher costs than Cameroon

While Gabon’s latest issuance surpasses Cameroon’s in ambition, it also comes with a steeper price tag. Cameroon’s recent Eurobond benefits from a two-year grace period and a dollar-euro swap mechanism, which converts dollar payments into euros to mitigate exchange rate risks for a country pegged to the euro. According to Cameroonian authorities, this structure reduces the effective cost of the operation to 7.79% in euros.

Until Gabon’s effective yield is published, a full comparison remains incomplete. For now, the Gabonese coupon of 9.375% remains significantly higher than Cameroon’s adjusted rate, highlighting the premium investors demand for Gabonese debt.

The primary gains for Libreville lie in the increased funding volume, extended maturity, and the absence of simultaneous refinancing, rather than a substantial reduction in borrowing costs.

Moody’s maintains a cautious stance

This Eurobond issuance follows Moody’s decision to maintain Gabon’s sovereign credit rating at Caa2, while revising its outlook from stable to negative. The agency cited Gabon’s significant financing needs, limited access to financial resources, and the risk of additional debt restructuring or refinancing operations as key factors for the downgrade.

The 9.375% coupon reflects that, despite strong investor demand, lenders continue to demand high returns to finance Gabon’s sovereign obligations, underscoring persistent risk perceptions.

Funds allocated to investments and arrears settlement

According to official documentation, the net proceeds from the Eurobond will be directed toward public investment projects and the settlement of arrears. The majority of these arrears pertain to external and multilateral commercial commitments, rather than debts owed to local enterprises.

The $920 million raised falls below the ceiling set by the revised finance law enacted on July 17, which authorized up to 857.9 billion XAF (approximately $1.5 billion) in international borrowings. With this issuance, Gabon has utilized nearly 61% of its available borrowing capacity, leaving roughly $580 million in untapped funds. No further issuance has been announced at this time. The revised law also allowed for maturities of up to ten years, though Gabon secured only seven years—an aspect authorities have not yet explained.

Signaling reform progress to the IMF

This Eurobond issuance was preceded by a preliminary prospectus published on July 27 and led by Finance Minister Thierry Minko. The government views the strong investor response as a sign of renewed confidence in Gabon’s economic trajectory and the reforms implemented over recent months.

This positive signal may reinforce ongoing negotiations with the International Monetary Fund (IMF). Technical discussions are ongoing, with an IMF mission expected in Libreville in September to finalize an economic and financial program before the end of 2026.

Despite this commercial success, Gabon continues to face a persistent reality: while international markets are once again accessible, access comes at a high-risk premium.