• BOAD says sovereign bond purchases are liquidity management

• Member states accelerate borrowing; Senegal raises 600 billion CFA

• Regional issuance seen exceeding 15,000 billion CFA in 2026

The West African Development Bank (BOAD) is defending its practice of investing part of its treasury in sovereign bonds issued by member states of the West African Economic and Monetary Union (WAEMU), describing the strategy as purely financial. The aim is to deploy surplus liquidity to generate returns and reduce the cost of holding idle cash.

In a note to investors earlier this week, the Lomé-based lender said purchases of government securities fall strictly within its liquidity management framework. The bank said the investments are intended to optimize treasury operations and do not constitute indirect budget support for member states. BOAD, which finances the eight WAEMU countries, added that it has not recorded a single sovereign default in more than 50 years of operations.

However, the current environment casts the strategy in a different light. Since last year, and more markedly since the start of this year, member states have accelerated borrowing on the regional market. Senegal is facing mounting budgetary pressure and a sharp upward revision of its public debt. It has already raised more than 600 billion CFA francs ($1.07 billion) in 2026.

Before Senegal’s latest issuance, nearly one-third of the 598 billion CFA francs raised this year had been subscribed in the Togolese market. The concentration has raised questions. According to several analysts, no institution in Lomé other than BOAD is likely to have sufficient liquidity to absorb such volumes of Senegalese debt.

A similar case involving Benin has added to the speculation. At the end of last year, more than 100 billion CFA francs were raised from investors in Togo in a single bond sale, an unusually large amount for the Lomé market.

In a monetary union where the investor base remains concentrated, the presence of an institutional buyer capable of absorbing large volumes can act as a stabilizing force. Commercial banks account for about 80% of the market, alongside a growing number of pension funds and insurers. Regional issuance is expected to exceed 15,000 billion CFA francs in 2026, sharply higher than in 2025. After surpassing 11,000 billion CFA francs last year, issuance this year is again being driven primarily by Côte d’Ivoire and Senegal.

Fiacre E. Kakpo