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FINANCIAL MARKET ISSUERS : Cemac Zone Holds up Despite Global Rising Inflation

Despite a context hit by inflation that is not favorable for financing mobilization, the bond issues launched simultaneously by Cameroon, Gabon and soon Congo are a sign that the sub-regional capital market is generating a certain enthusiasm for issuers.

A survey by the United States Federal Reserve (FED) carried out among 80 financial organizations and published on May 08 last year indicates a persistence of both the tightening of credit conditions and a decrease in credit demand in all credit categories during the first quarter of 2023. A continuous increase in the cost of credit, under the effect of the tightening of monetary policies in advanced countries, in order to fight against galloping inflation. Most central banks are implementing a restrictive monetary policy, with successive increases in their key interest rates.

In the subregion, the Bank of Central African States (Beac) has raised its tender interest rates (Tiao) four times as well as the marginal lending facility rate, since 2022. During the current month, Cameroon and Gabon, in this case, simultaneously launched bond loans for an equal amount of 150 billion FCFA each. This double bond issue launch has led some to fear a failure of these operations, given the importance of the amounts to be mobilized. Despite a context that is not very favorable to the mobilization of financing, the actual launch of said fundraising a week ago, marked by underwriting by the arranging consortia amounting to 104 billion FCFA and 100 billion FCFA for the two States, respectively, leaves little doubt about the success of these loans by the close of subscriptions by June end. Congo on her side is looking forward to launching its 2023 bond, worth 200 billion FCFA according to its initial forecasts.

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In the opinion of experts, there are reasons to be satisfied to see that the financial market of Central Africa generates a certain enthusiasm on the part of issuers. « This translates into the fact that we can have at the same time different issuers who come to solicit investors. It allows each investor to make their trade-offs. In any case, a complaint that comes up quite often is that the placement materials are not diversified enough. These operations launched simultaneously by Cameroon and Gabon give each investor the choice to place his money on one or the other issuer, and why not on other states that could issue bond loans by public offering in the meantime, » welcomes Ernest Christian Pouhe, Managing director of Attijari Securities Central Africa (Asca), member of the investment syndicate of the 2023 bond loan of the State of Cameroon.

The African Development Bank (Afdb) considers the capital market in Central Africa to be booming, with the improvements made in three projects that it has accompanied in recent years, including : the project to support the start-up of the unified financial market of Central Africa, and the deepening of the Cemac financial sector. On the sub-fund managed by the Central African Securities Exchange (Bvmac), there are 18 securities as of January 31, 2022 compared to 15 securities a year earlier. The bond sub-fund, on the other hand, had increased from 11 values on January 31, 2021 to 11 values on January 31, 2022, an increase of 18.18 %.


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