The Central Bank of West African States (BCEAO) has announced its plan to buy public securities from Niger worth CFA77 billion. Scheduled for May 7, this move comes as Niger re-enters the public securities market on April 26, after recent sanctions by the Economic Community of West African States (ECOWAS) were lifted. Niger raised CFA457 billion with various issuances during this return.
The BCEAO’s buyback operation specifically targets securities with a maturity of 3 months to 3 years. In the last issuance, the weighted average yield for 364-day bills stood at 9.30%, while that for 3-year bonds reached 9.35%.
To encourage banks to participate, the central bank explained that they can sell Niger’s securities without requiring an adjustment to their book value, even if the current selling price (market price) is below their initial book value.
Observers believe this BCEAO buyback should assist Niger in managing its public debt by easing interest payment burdens and refinancing maturing obligations, especially as the country undergoes debt restructuring with regional investors. A significant portion of the CFA457 billion raised last week is earmarked for clearing accumulated arrears since the sanctions.
The government committed to settling due interests and capital. Half of the due interests were scheduled for payment on April 26, the issuance date, followed by the remainder within 30 days after the projected principal restructuring, as announced by Umoa-Titres.
This central bank support is crucial for Niger, which is also aiming to diversify its economic partnerships. Earlier in April, the Sahelian nation signed a memorandum of understanding with the China National Petroleum Corporation for crude oil sale. Under this agreement, Niger will receive a $400 million advance from CNPC, repayable with a 7% interest within the following 12 months.