Benin is accelerating efforts to secure fresh external financing and is poised to issue the first eurobond by an African country in 2025. This move underscores the government’s strategy to diversify its funding sources and tap into favorable market conditions.
The government has enlisted global financial giants Citigroup Inc., J.P. Morgan Chase & Co., and Societe Generale SA to arrange investor meetings, which began on January 8, both virtually and in-person in London. These meetings are part of a broader effort to position Benin in the eurobond market for the first time.
The planned bond will be of benchmark size, featuring a 16-year maturity and a 15-year weighted average life. This marks a significant move just under a year after Benin’s last dollar bond issuance, as the country seeks to leverage strong investor demand for African debt in the context of robust economic activity in emerging markets.
Ousseynou Diagne, head of Africa debt capital markets at Societe Generale, emphasized that Benin is returning to the market at a time when investor appetite for emerging-market debt, especially from African issuers, remains strong.
The bond issuance is set against the backdrop of a record start to 2025 for emerging-market bond sales, with developing nations raising a combined $26 billion in the first week of January. This surge is partially driven by uncertainties related to the future political climate in the United States, particularly concerning Donald Trump’s potential return to the White House later this month.
Market analysts predict that Benin’s eurobond could be priced at approximately 8%, with Benin’s 2038 dollar bonds trading at 8.76% as of Wednesday, according to Bloomberg data.
Benin’s decision to issue the eurobond also stems from the country’s vulnerability to external financing pressures, particularly as it faces political instability in neighboring Niger and internal tensions ahead of the 2026 presidential elections. Benin’s reliance on external debt is viewed as a potential economic risk, which has spurred the government to act sooner than expected.
President Patrice Talon, whose second term is set to end in 2026, will not seek re-election. Talon had initially pledged to serve only one five-year term but later reversed this stance, winning re-election in 2021 amid opposition boycotts.
In addition to political challenges, Benin is grappling with the impact of an armed insurgency spilling over from Niger, leading to an uptick in militant activity in its northern regions. The US has provided military assistance to bolster Benin’s counterinsurgency efforts.
The International Monetary Fund (IMF) recently upgraded Benin’s outlook, raising it from stable to positive in October. This followed a staff-level agreement with the IMF for access to up to $95 million in financing, further supporting the country’s financial position.
Benin’s government also has access to a variety of financing options, including concessional funding from the IMF and commercial loans, according to Diagne of Societe Generale. Alongside the eurobond issuance, Benin is also offering a €250 million capped tender for its 4.875% euro-denominated bonds due 2032, backed by a loan from a commercial bank.
This multi-faceted approach highlights Benin’s efforts to maintain economic stability and manage its external debt amid regional challenges and political transitions.