Public securities: Cameroon pays up to 8.48% on its 3-year OTAs in June 2024
In June 2024, Cameroon’s public securities market witnessed a significant development as the country offered an interest rate of up to 8.48% on its 3-year Treasury Bonds (OTAs). This move reflects a notable increase from the 7.2% interest rate recorded in September 2023, marking a shift in the nation’s borrowing strategy amid changing economic conditions.
The rise in interest rates for Cameroon’s OTAs can be attributed to several factors. Primarily, the tightening of monetary policy by the Bank of Central African States (BEAC) has played a crucial role. To combat inflation within the CEMAC zone, BEAC has implemented measures such as raising key interest rates, suspending liquidity injection operations, and intensifying liquidity withdrawals from banks. These actions have inevitably led to higher borrowing costs for both governments and economic entities.
Moreover, the competitive landscape of the market has influenced Cameroon’s decision to adjust its interest rates. With other states offering more attractive rates, Cameroon has had to recalibrate its approach to remain a viable option for investors. This recalibration is evident in the country’s departure from its long-standing policy of conservative interest rates, which had previously allowed it to borrow at rates below 3% for short-term securities and below 7% for long-term securities.
Despite these challenges, Cameroon has maintained its position as a cost-effective borrower in the sub-regional public securities market. The country’s strategic response to the evolving market dynamics demonstrates its commitment to fiscal prudence while navigating the complexities of public debt management.
Investors and market analysts will be closely monitoring Cameroon’s public securities market to see how these interest rate adjustments will impact the country’s borrowing costs and overall economic health in the long term. The situation underscores the delicate balance between maintaining fiscal stability and adapting to the ever-changing financial environment.
For a more detailed analysis of Cameroon’s public securities market and the factors influencing the current interest rates, readers can refer to the comprehensive reports provided by Breaking News Bilingue
The Bank of Central African States (Beac) published on August 5 the yield curves of government securities issued by three CEMAC countries during June 2024. These are the Cameroonian, Congolese and Gabonese Treasuries. About Cameroon, it is noted that the country’s remuneration ceiling stands at 8.48% for the period. These interest rates were applied to Assimilable Treasury Bonds (OTA) with maturities of 3 and 3.5 years, the most popular government bonds issued by the country. This immediately prompted massive investment by Treasury Securities Specialists (SVT), given the attractive interest rate offered by the country. This makes its 3 and 3.5-year bonds more attractive than those of the Gabonese Treasury.
On the other hand, on its 3-year OTAs, Gabon posted an average remuneration rate of 7.43% in June 2024. Investors instead rushed to the 3.5-year and 4-year OTAs, which posted an interest rate of 7.44%, one point above the previous one. This internet rate is up compared to May when Gabon offered respective remuneration rates of 6.85% and 7.02% for its issues of the same maturities.
Congo is, best client for investors
On the CEMAC government securities market, it is the Republic of Congo that is breaking the record for remuneration on its securities. The interest rate ceiling proposed by Denis Sassou Nguesso’s country is 10.10%, paid on its 6 and 7-year OTAs. Concerning bonds with 3, 3.5 and 4 years of maturity, this CEMAC member state offered yields of 9.94%, 10.02% and 10.06% respectively. This makes it the most generous country on the market.
In recent years, the money market has established itself as a place of choice for fundraising by CEMAC treasuries as well as a preferred source of financing for States. Take for example, the fundraising projections of four CEMAC countries (Cameroon, Congo, Gabon, Equatorial Guinea) for the 3rd quarter of the current year, they plan to raise 1,031 billion CFA francs. The key is 385 billion CFA francs for the Cameroonian Treasury, 108.2 billion CFA francs for Congo, 15 billion CFA francs for Equatorial Guinea and 331 billion CFA francs requested by the Gabonese treasury.
