(Ecofin Agency) - The recent operations on the WAEMU capital market show renewed investors’ interest in government securities. This bodes well for member countries despite the still uncertain economic context.
In the trading week of April 24 to 28, five government security issuance operations were carried out on the WAEMU public securities auction market. Overall, CFAF 227 billion ($381.8 million) was raised against CFAF 113 billion the week before. This increase reflects renewed investor interest in public securities issued through auctions with the assistance of UMOA-Titres, after a difficult first quarter marked by a series of failed operations.
During the week under review, the issuers raised 132% of the sourced amount against 121% a week earlier. Indeed, that week, the five issuers were sourcing CFAF210 billion. The previous week, three issuers were sourcing CFAF105 billion from the market.
Between April 24 and 28, the countries that raised the funds in the market were Togo (CFAF33 billion), Côte d'Ivoire (about CFAF66 billion), Burkina Faso (CFAF32 billion), Niger (CFAF41 billion) and Senegal (CFAF55 billion). The maturities of the securities issued ranged between 91 days and 5 years, with yields above 5% for short-term securities, depending on the investor's country of residence.
Specifically, on April 24, 2023, Togo entered the market in a bid to raise CFAF33 billion with 182-day, 3-year, and 5-year securities. Investors offered CFAF 40 billion, representing a 133% oversubscription rate.
The following day, Côte d'Ivoire tried to raise CFAF66 billion with 91-day, 364-day, and 3-year securities. It attracted 133.69% of that amount, a percentage that shows regional investors’ appetite for Ivorian securities.
On April 26, 2023, Burkina Faso successfully raised CFAF32 billion in the public securities market. The maturities of its securities were 182 days, 3 years, and 5 years.
On April 27, 2023, Niger also raised CFAF41 billion with 182-day, 364-day, and 3-year securities. The proceed of the operations are destined to finance infrastructure and development projects.
Finally, on April 28, 2023, Senegal closed the week by raising CFAF55 billion with 182-day, 364-day, and 3-year securities. The operation was 182% oversubscribed.
For Umoa-titres, "investors can optimize their cash flow by taking advantage of the rise in yields on the public securities market, which are between 5% and almost 8% depending on the maturity." Indeed, at the moment, government securities offer more attractive yields than savings accounts (3.5%), interest-bearing current accounts, and DATs (term deposits) over the same period.
It should be noted that for this week (May 1-5), Côte d'Ivoire, Mali, and Benin plan to raise CFAF95 billion on the same market. This week will mark Benin’s return to the market since February 2023 when it stopped its operations due to the liquidity crisis in that market.
Fiacre E. Kakpo