There is an optimistic stance on the WAEMU government securities market. In a resilient economic climate, marked by falling inflation and the central bank BCEAO's announcement of maintaining its key rates, three member states' Union successfully completed their issue operations last week.  

Between June 7 and 9, Burkina Faso, Niger, and Senegal raised CFAF116.93 billion on the WAEMU government securities. The amount exceeded their CFAF110 billion target that week.  

Specifically, on June 7, Burkina Faso entered the market trying to raise CFAF30 billion with 364-day, 3-year, and 5-year securities. The operation was 101.76% subscribed thanks to 13 large investors and demand from investors residing in Burkina Faso. The country kept CFAF28.92 billion. The weighted average yields were well above the rates set in advance. They were namely 8.25% for the 364-day securities, 7.98% for the 3-year bonds, and 7.88% for the 5-year bonds. 

Niger followed on June 8 with 182-day, 364-day, and 3-year securities to raise CFAF30 billion. The issue attracted interest from 19 investors, which covered 127.90% of the target with significant participation from investors outside Niger (97.21%). The weighted average yield of Nigerien securities was 7.87% for 182-day treasury bills, 8.04% for 364-day treasury bills, and 8.23% for 3-year bonds.  Once again, for this issue, the yields demanded were high. Nevertheless, the country kept CFAF33 billion. 

On June 9, Senegal closed the trading week with an operation to raise CFAF50 billion. The issue saw a record 121.73% subscription, largely supported by Senegalese primary dealers who bought up to 92.73% of the securities. The targeted auction involved a restricted pool of investors, namely BOA Sénégal, BIIC Financial Services du Bénin, CBAO Sénégal, Coris Bank Burkina, CGF Bourse, Ecobank Sénégal and Orabank Togo. Senegalese securities were issued with weighted average yields of 6.86% for 364-day Treasury bills, 7.46% for 3-year bonds, and 7.19% for 5-year bonds. The country kept CFAF55 billion. 

Overall, the average bid-to-cover ratio improved slightly to 117.13% from 115.06% the previous week. These figures illustrate the sustained interest shown by investors in WAEMU sovereign bonds. The maturities were also key in that performance.  Issuers offered securities with short maturities (182 days and 364 days) and medium maturities (3 years and 5 years), a strategy already used in previous weeks.

However, the fact that the weighted average yields of all securities were higher than the predefined interest rates represents an additional cost for issuing governments. This shows that investors feel the market is increasingly risky.  

Fiacre E. Kakpo