As a relatively small issuer in the West African Economic and Monetary Union (WAEMU) market, Benin is surprisingly borrowing at more favorable terms than its larger neighbor, Côte d'Ivoire, which is considered the regional benchmark. Its highly sought-after debt is attracting significant investor interest. How could that be?

Benin raised 33 billion CFA francs ($59 million) through a 91-day treasury bill sale on Thursday, September 4, 2025. The yield on the operation, which was nearly three times oversubscribed, recorded a 5.06% yield.

The West African nation's debt is a rare find on the regional market, and it enjoys a confidence premium that has pushed its interest rates below those of Côte d'Ivoire, the region's benchmark issuer. Every one of Benin's debt offerings this year has been oversubscribed, a notable achievement within the West African Economic and Monetary Union, which is currently grappling with rising financing costs and fiscal pressures. Analysts and investors attribute Benin's success to a mix of macroeconomic discipline, proactive debt management, and a scarcity of new debt offerings.

As of August 31, 2025, the yields on Beninese securities (5.2% for 3 months; 6.2% for 12 months) remained lower than those of Côte d'Ivoire (6.4% and 7.0%) and Senegal (6.7% and 6.9%).

Solid Macroeconomic Fundamentals

Benin has earned a reputation as a model of economic discipline in the region, being the first country in the zone to bring its budget deficit below the community threshold of 3% of GDP as early as 2024, one year ahead of the deadline. Inflation remained contained at 0.5% in the first quarter of 2025, one of the lowest in the WAEMU. Growth, at 7.5% in 2024, driven by public and parastatal investments, remains on a sustained trajectory.

The only drawback is the current account deficit, estimated at 6.8% of GDP in 2024, which has been inflated by massive imports of goods and services needed for the development of the Glo-Djigbé Industrial Zone (GDIZ), the country’s industrial park. However, Beninese authorities consider this imbalance temporary. They expect it to subside as factories come into full production and exports take over.

A Restructured Debt Portfolio

In recent years, Benin has thoroughly reshaped its debt portfolio. As of June 30, 2025, three-quarters (76.2%) of Benin's public debt was external, with an average maturity of 11 years and a weighted average interest rate of 3.1%, compared to four to five years for domestic debt at 4.6%. When questioned about the risks associated with this external exposure, Beninese authorities are quick to defend their strategy. According to the CAGD, the country’s debt management agency, 98.6% of the portfolio is at a fixed interest rate, which stabilizes the cost of service. Its currency exposure is largely dominated by the euro (58.2%), well ahead of the dollar (10.2%). For the more volatile dollar-denominated debt, the Treasury uses hedging instruments, particularly currency swaps, to reduce risk.

For example, in January 2025, the Ministry of Finance undertook two operations: a $500 million Eurobond with a coupon of 8.375% was hedged to bring its real cost down to 6.48%, and a commercial loan of 500 million euro was signed with Deutsche Bank, guaranteed up to 200 million euro by the World Bank and partially covered by the insurer ATIDI.

Of the latter loan, 250 million euros was used to repurchase 45% of a Eurobond issued in 2021, which was then trading at a 7.4% discount. According to the IMF, the operation generated 20 million euros in immediate savings and avoided 92 million euros in future interest payments.

The remaining 250 million euros was used to prepay domestic securities maturing between May and August 2025. This was a way to avoid having to re-issue on an increasingly expensive regional market. "The early repayment restored liquidity to the banks, allowing them to reposition their resources earlier than expected, in a context where financing demand remains strong," explained Ahmet Fall, director of capital markets at Impaxis Securities, a management and brokerage firm (SGI) based in Senegal. "This has helped improve the perception of Beninese securities, which are now seen as safer and better managed, but rare," he added.

A Saturated Market, But Not For Benin’s Securities

Since the beginning of the year, Benin has only raised about 250 billion CFA francs while repaying nearly 375 billion CFA francs. By comparison, Côte d'Ivoire has raised more than 4,500 billion CFA francs and Senegal about 2,500 billion CFA francs on a regional market that has already seen nearly 10,000 billion CFA francs in transactions (across all segments).

Benin's infrequent auctions, limited to tranches of 20 to 30 billion CFA francs each, turn into genuine competitions. Demand systematically exceeds supply, sometimes by more than 300%, even though the regulations of the regional debt authority, UMOA-Titres, prohibit issuers from retaining more than 110% of the announced amount. "This allows debt management units to better select offers and retain only the most competitive ones, which helps lower the average cost of financing," explained a market specialist.

This differential creates a scarcity premium. As a result, investors, looking to diversify portfolios saturated with Ivorian and Senegalese securities, accept tighter conditions to get their hands on Beninese paper.

"This scarcity acts as an implicit premium: it puts Benin in a commanding position, where it is no longer chasing investors, but investors are vying for its securities," Fall analyzed. "Investors have few Beninese securities in their portfolios; as soon as an issue arrives, they position themselves massively to rebalance, which explains the high demand and the favorable conditions obtained by Benin," confided a Beninese asset manager.

Long-Term securities only… 

The confidence premium granted to Benin is not only based on the scarcity of its issues, as Ahmet Fall pointed out. It is also explained by the strategic direction of Beninese authorities in their debt management, an approach praised by rating agencies. Since 2019, the country has progressively reduced its reliance on treasury bills—short-term debt—which are considered more costly, in favor of bonds. The goal is twofold: to reduce financing pressure and to have sustainable resources to finance its investments. As of the end of June 2025, bonds represent an outstanding amount of 1,404 billion CFA francs, spread across 72 securities, with an average residual maturity of 5.4 years and a rate of 5.5%. In contrast, treasury bills now only account for 28.6 billion CFA francs, with a higher cost of around 6.6%.

To achieve this, Benin launched a syndicated issuance mechanism on the regional market in 2021. This mechanism allows it to raise larger amounts from targeted investors with a lead brokerage firm, which is different from the UEMOA-Titres process. In four years, nearly 410 billion CFA francs have been raised through five issues, some with 15- and 20-year maturities. This choice has allowed the country to extend its yield curve and diversify its investor base. As a result, the average maturity of Benin's debt reached 9.7 years, and its weighted average cost fell to 3.4%. This is in stark contrast to the average life of regional securities, which is two years, as the market has been concentrated on the short term (92 days to three years) since 2023. Banks, which represent 90% of investors, have focused on these short maturities, abandoning long-term ones.

The IMF commends this strategy but calls for prudence. The institution recommends a gradual rebalancing toward the domestic market, despite the more costly conditions, to limit vulnerabilities.

A regional actor working for a brokerage firm in Côte d'Ivoire concurs: "More innovative operations are needed on the local market to deepen it. The case of Senegal, which was forced to turn massively to the domestic market, shows that if you don't prepare this depth in advance, the day you need it most, there may be no one to respond."

The country's advantageous position on the regional market should not mask a structural element: Benin can be so selective in its issues and turn to international markets thanks to its membership in the WAEMU and the pooling of foreign exchange reserves. Without this anchor, access to external market financing would have been much more limited. Sales of Ivorian cocoa, Senegalese oil, Burkinabe and Malian gold, and Beninese cotton contribute to this collective solidity, which guarantees investor confidence in Benin beyond its fundamentals.

Fiacre E. Kakpo