Market News

DAKAR, Jan 23 (Reuters) – Benin’s government said on Friday it had swapped the $850 million borrowed from its debut international sukuk and a 2038 bond tap into euros to help manage its currency risk and costs.

The West African nation said its $500 million seven-year sukuk had been fully hedged into euros, resulting in a 4.92% euro coupon, while a replica switch of the extra $350 million it had borrowed on its 2038 bond translated to a 6.19% euro coupon.

Benin is part of the West African Economic and Monetary Union, where the CFA franc is pegged to the euro, a framework that can make euro-linked liabilities more attractive for debt managers seeking to limit currency mismatch.

Research from the Bank for International Settlements and the World Bank has noted that cross-currency swap markets can influence whether “synthetic” funding in another currency is cheaper than issuing directly.

Benin said it had seen exceptionally strong demand, with combined orders exceeding $7 billion — more than eight times the combined issue size.

It said the money would help cover a significant share of its 2026 budget needs, as well as improve the maturity profile of its public debt.

The country is rated B1 by Moody’s, BB- by S&P and B+ by Fitch, which recently revised its outlook on the sovereign to positive on stronger growth prospects and a prudent fiscal stance that should cut its debt-to-GDP ratio.

Citigroup, Emirates NBD Capital, HSBC and JPMorgan acted as joint lead managers for the bond tap. In addition, Rothschild & Co served as a financial adviser. The sukuk offering saw Citigroup, Emirates NBD Capital, HSBC and JPMorgan serving as global coordinators, while Arqaam Capital, Citigroup, Emirates NBD Bank, HSBC and JPMorgan jointly book-ran the deal.

The debt sale had been briefly delayed when concerns over U.S. and European tensions over Greenland made markets jittery this week, but its completion adds to an already record start to a year for EM sovereign supply.