Beginning March 17, Cameroon’s Treasury will initiate a public bond issuance program to raise CFA145 billion through Treasury Bonds with maturities of 3 to 7 years. This strategic move reflects adjustments to meet rising market expectations, offering competitive interest rates. Despite significant increases in borrowing costs since 2020, Cameroon remains notable for its reliable debt repayment history within the Cemac region.
Effective March 17, Cameroon’s Treasury will initiate a public bond issuance program via the Bank of Central African States (BEAC), aiming to raise CFA145 billion by March 31. This initiative will comprise six long-term bond issuances, known as Treasury Bonds (OTAs), with maturities ranging from 3 to 7 years, targeting CFA20 billion to CFA25 billion per issuance. The interest rates offered will be competitive, at 6% for 3-year bonds, 6.5% for 4-year bonds, 6.75% for 5-year bonds, and 7.5% for 7-year bonds.
This bond issuance reflects Cameroon’s strategy to enhance its attractiveness to investors amidst a challenging market. In recent years, the country has adopted a more cautious approach regarding interest rates; however, adjustments have been made to meet increasing market expectations for higher yields. The rise in bond rates can be attributed to monetary policy changes enacted by BEAC in 2021, which sought to address inflation and subsequently increased borrowing costs on public debt.
Historically, Cameroon maintained a unique position in sub-Saharan Africa, borrowing at notably low interest rates, with short-term bonds under 3% and long-term bonds below 7%. However, Finance Minister Louis Paul Motazé highlighted that interest rates on short-term Treasury Bonds have dramatically increased from 2.67% in 2020 to 6.33% in 2024 during a presentation in Douala on February 13, 2025, showcasing an over 100% rise.
Additionally, the cost of issuing medium and long-term Treasury Bonds reached 7.2% in September 2023, the highest rate since the public debt market commenced in 2011. Despite these increases in interest rates, Cameroon retains the lowest borrowing costs within the Cemac monetary zone, attributed to its strong reputation for timely debt repayments. Minister Motazé underscored that since the establishment of the BEAC public debt market, Cameroon has consistently met its payment obligations, never defaulting on any debts.
Cameroon’s decision to raise interest rates and launch a public bond issuance program illustrates its efforts to attract investors amidst a challenging economic environment. Despite rising borrowing costs and higher interest rates, the country maintains a robust reputation within the Cemac monetary zone for honoring its debts, thus positioning itself favorably in the eyes of investors. The upcoming bond issuance is a critical step in addressing market demands and ensuring financial stability.
Original Source: www.businessincameroon.com
