These resources should contribute significantly to financing development projects and supporting the national economy of Burkina Faso.
On October 9, 2024, the State of Burkina Faso carried out an issue of securities on the financial market of the West African Economic and Monetary Union (WAEMU). This operation, which took place by auction, allowed the country to raise a total amount of 25.94 billion FCFA, or approximately 39.5 million euros.
The issue included a varied range of securities, ranging from Assimilable Treasury Bonds (BAT) with a duration of 364 days to Assimilable Treasury Obligations (OAT) over 3, 5 and 7 years.
This diversity of maturities allows Burkina Faso to respond to the different investor profiles present on the regional market, thus offering options both for those seeking short-term investments and for those favoring longer-term commitments.
A success marked by strong demand
The operation was a great success with investors, with a total amount of bids reaching 26.13 billion FCFA. This figure testifies to the persistent appeal of Burkinabe securities on the regional market.
The 364-day BATs particularly attracted investors, totaling 17.71 billion FCFA in submissions, or nearly 68% of the total amount offered. This marked preference for short-term securities suggests a certain caution on the part of investors, who seem to favor liquidity in the current economic context.
The rates of return obtained during this issuance offer an interesting insight into market conditions and the perception of risk associated with Burkinabe debt. With yields ranging from 9.83% for 364-day BATs to 8.17% for 7-year OATs, the rate structure presents an inverted curve.
This unusual configuration could reflect either expectations of an improvement in the country’s economic situation in the medium term, or a higher risk premium in the short term. In all cases, these rates demonstrate the delicate balance between attractiveness for investors and the cost of financing for the State.
Participation dominated by national actors
Although the issue attracted investors from several countries in the UEMOA zone, such as Benin, Ivory Coast and Senegal, it was Burkinabè players who largely dominated subscriptions. With nearly 90% of the total amount retained, or 23.24 billion FCFA, the massive participation of national investors underlines the confidence of the domestic market in the country’s economy.
However, this heavy reliance on local investors also raises questions about the need to further diversify the investor base in the future, in order to reduce potential risks and broaden sources of financing.
This successful issue demonstrates Burkina Faso’s ability to mobilize significant resources on the regional market, despite the economic and security challenges facing the country. With a coverage rate of 86.47% of the amount put up for tender and an impressive absorption rate of 99.28%, the operation can be considered a relative success.
However, certain aspects deserve special attention for future broadcasts. The high concentration of domestic investors, while demonstrating domestic market confidence, also highlights the importance of diversifying the investor base to ensure greater long-term stability.
Additionally, the inverted interest rate structure may require in-depth analysis to optimize future financing strategies.
ARD/te/APA
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