October 22, 2012 / 12:57 PM / in 5 years

UPDATE 3-Ivory Coast sets 2-year target on missed debt payments

* Three coupon payments missed on 2032 Eurobond

* Bond went into default during 2011 unrest

* Back payments schedule shorter than expected -bondholder (Adds official comments)

By Carolyn Cohn

LONDON, Oct 22 (Reuters) - Ivory Coast offered on Monday to make missed coupon payments on a defaulted bond over the two years to December 2014, taking a step on the road to debt market rehabilitation following a civil war.

The West African country also wants to increase the $2.3 billion sovereign Eurobond, which matures in 2032, by up to $187 million in an exchange involving other defaulted debt, a senior finance ministry official said.

“Our payment capacity remains very reduced in the light of the ambitious development programme that we have,” ministry chief of staff Emmanuel Koffi Ahoutou told an investor meeting and conference call.

Ivory Coast’s economy is forecast to expand by more than 8 percent this year and 9 percent in 2013, but the world’s top cocoa grower has been hit by falling food and commodity prices, Ahoutou said, asking bondholders to waive late payment charges on the missed coupons.

Launched in April 2010, the 2032 bond went into default in early 2011 during unrest that descended into civil war following a disputed presidential election.

That added to a chequered debt history, with the 2032 bond having itself been issued as a restructuring of defaulted debt dating back to 2000. The 2000 debt was in a turn a restructuring of previous debt through a Brady scheme, creating securities guaranteed by the U.S. Treasury.

“The objective is to emerge from this 10-year crisis,” Ahoutou said through an interpreter.

“...The republic will do its utmost to live by its commitments.”

Ivory Coast resumed coupon payments on the 2032 bond earlier this year but has three missed payments to make up. They total around $96 million, taking into account the planned increase in bond size, according to the offer document seen by Reuters.


Ivory Coast has a total of around $4 billion in outstanding debt, according to the document, including sums owed to multilateral organisations and the Paris Club group of sovereign creditors.

The 2032 bond rose to record highs around 91.5 cents on the dollar on Monday. The issue, one of the world’s best-performing this year, has risen 5 cents since last week, when the country announced the meetings to discuss the missed coupon payments.

“End-2014 is quicker than expected for the coupon payments,” said one bondholder.

The bond’s pricing has also benefited from a third round of money-printing by the U.S. Federal Reserve that has made high-yielding debt more attractive to investors, analysts say.

“There is even more price upside in the pipeline since the 32s are still trading wide to other African Eurobonds with similar or weaker credit fundamentals,” said Samir Gadio, emerging markets strategist at Standard Bank.

Authorities from the West African country will make a further presentation to bondholders in New York on Wednesday.

The missed coupons will be paid in five instalments, according to the proposed schedule, starting in Dec 2012 and ending in Dec 2014.

Bondholders will have until Nov 6 to vote on the offers.

The bond increase requires the agreement of bondholders representing more than 50 percent of the outstanding principal amount, while the schedule for missed coupons requires 75 percent acceptance. (Additional reporting by Joe Bavier in Abidjan; Editing by Mike Dolan and John Stonestreet)

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