Ivory Coast: Positive Outlook for Sovereign Debt

Ivory Coast, the world’s top cocoa producer, has surpassed South Africa as the highest-rated sovereign in Sub-Saharan Africa with foreign debt outstanding. The latest S&P Global Ratings affirmed both countries at BB-, but Ivory Coast’s outlook was raised to positive due to an improving debt profile, while South Africa’s outlook remained stable.

• Ivory Coast surpasses South Africa as the highest-rated sovereign in Sub-Saharan Africa with foreign debt outstanding
• Ivory Coast's debt maturing in 2028 fell to the lowest since April 15, while South Africa’s dollar debt due in 2030 also decreased
• Ivory Coast's economy, one of the region’s fastest-growing, is projected to expand by 6.5% in 2024

According to the index, the yield on Ivory Coast’s debt maturing in 2028 fell 13 basis points to 7.09% on Monday, the lowest since April 15. South Africa’s dollar debt due in 2030 traded at a yield of 6.9%, down from over 8.5% in October.

“The rating trajectory of Côte d’Ivoire over the past ten years has been impressive,” said Samir Gadio, head of Africa strategy at Standard Chartered. “Many other African sovereigns have been downgraded over that period.”

In January, Ivory Coast sold $2.6 billion in eurobonds, breaking Sub-Saharan Africa’s nearly two-year lockout from international capital markets. The economy, one of the region’s fastest-growing, is projected to expand by 6.5% in 2024, up from 6.2% last year.

Despite a decline in cocoa production, the government secured a $4.8 billion funding agreement with the IMF. S&P expects commodity exports to rise over the next two years.

“The positive outlook reflects our view that rising commodity exports could significantly reduce external and fiscal imbalances,” said Sebastien Boreux, primary credit analyst at S&P. This, along with high economic growth, benefits from reforms, donor support, and stability.

In March, Moody’s raised Ivory Coast’s rating to Ba2, two levels below investment grade, putting it on par with South Africa. Gadio noted that while both countries have similar ratings, Ivory Coast’s bonds are likely to continue trading at a premium.

“Côte d’Ivoire has built a strong track record in global financial markets,” Gadio said, but added that further fiscal consolidation is needed to stabilize debt levels.