Cote D’Ivoire’s Default Defiance Detour
Cote D’Ivoire missed a $30 million coupon payment on its new $2.3 billion Eurobond after the grace period passed as the standoff between rival presidential claimants Gbagbo and Outttara dragged on despite numerous international actions and visits designed to resolve it. The US and Europe have enacted sanctions against the incumbent regime, and the World Bank has suspended lending as the African Union threatens military moves to complete the transition to a government led by the former IMF official who was widely recognized as the victor in the November poll despite a court ruling annulling Outtara’s votes in the north. The bond price halved around the default to 35 cents to the dollar as the yield touched 17.5 percent. Officials in Gbagbo’s administration pledged repayment, as they claimed to have money on hand to cover civil servant and military salaries, even as access to regional central bank accounts was denied and reinforced after a loyalist resigned as its head. To end the impasse, diplomats and business executives have recommended a boycott of cocoa exports that bring in $4.5 billion annually as the world’s top producer. Futures hit a record $3000/ton on the potential move by international traders, even though 3 million are employed directly and indirectly by the industry which is vital to projected 4 percent GDP growth this year. The UN peacekeeping mission has attempted to halt violence between supporters of the two camps although thousands of refugees have poured into next door Liberia to escape possible civil war resumption. The West Africa equity market was quiet as employees stayed away from Abidjan headquarters, and other Francophone Africa issues were tested, with Senegal’s and Gabon’s yields going to 8.5 percent and 6 percent, respectively. The latter was aggravated after an opposition leader again asserted 2009 elections won by Omar Bongo’s son were fraudulent as security forces clashed with demonstrators.
Ghana’s benchmark in turn jumped 500 basis points to almost 7 percent on the fallout from the sub-region as well as in North Africa with Egypt and Tunisia, while equities sputtered after a 30 percent 2010 gain lifted by the Jubilee oil field activation. That return was also required to attract orders for Nigeria’s debut $500 million sovereign bond placed after President Goodluck Jonathan got his party’s nod for re-election. However many investors spurned the offer on exhaustion of the excess crude budget account, 25 percent drop in foreign reserves to defend the naira, and persistent bank and securities firm woes which represented a decidedly mixed fortune.
