Bloomberg News

Ivory Coast Eurobonds Rise on Interest Payment Speculation

June 01, 2011

(Updates with London Club comment in fifth paragraph.)

June 1 (Bloomberg) -- Ivory Coast’s defaulted Eurobonds gained, rising from their lowest level since April, on speculation the government may make an payment as soon as December after saying it would miss a June 30 interest installment yesterday.

Creditors will probably “remain lenient with the Ivorians given the crisis and the reputational consequences of pushing for a tough restructuring,” David Petitcolin, an emerging- markets analyst at Royal Bank of Scotland Group Plc in London, said in an e-mailed reply to questions today. “We currently expect the bond to continue trading and would expect payments to resume at the next coupon date in December.”

The $2.3 billion of dollar-denominated bonds due 2032 of the world’s biggest cocoa producer gained 2 percent to 54.125 cents on the dollar as of 12:14 p.m. in London, according to prices compiled by Bloomberg. The debt fell 6.2 percent yesterday to 53.068 cents on the dollar, the lowest price since April 11. The bonds have rallied 55 percent since their record low on March 16.

The West African nation will not make a $28.6 million interest payment due by June 30 and will ask creditors to “renegotiate,” Finance Minister Charles Koffi Diby told reporters yesterday in the commercial capital, Abidjan.

The government hasn’t contacted the London Club of creditors about interest payments on the bonds, Thierry Desjardins, chairman of the London Club, said by telephone today.

No Contact

“We have not heard at all from the minister, neither officially or conversationally,” said Desjardins, who is also Paris-based vice president of sovereign debt restructuring at BNP Paribas SA.

Ivory Coast failed to make a $29 million interest payment due at the end of January as Alassane Ouattara, internationally recognized as victor of November elections, was locked in a five-month political standoff with Laurent Gbagbo, whose refusal to step down triggered a civil war.

The “base case is a regularization of arrears at a later stage this year without a restructuring,” Michel Aubenas, an emerging-market debt portfolio manager at Fischer Francis Trees & Watts, a subsidiary of BNP Paribas SA, in London, said by e- mail today. “The coupon payments are not large so the incentive to restructure is not there.”

Emergency Funding

The government is seeking emergency funds from the International Monetary Fund, the World Bank and the African Development Bank in a bid to stabilize the economy after the four-month political crisis that following a disputed November presidential vote. More than 2,000 people may have died in post- election violence, according to the United Nations.

The African Development Bank will give 77 billion CFA francs ($168 million) in budget-support funding to Ivory Coast, Richard Dofonssou, the Tunis-based lender’s representative in the country, said yesterday.

The Washington-based IMF’s board will decide on whether to approve a $130 million loan in July, Doris Ross, head of the delegation of international lenders visiting the nation, told reporters in Abidjan yesterday.

Ivory Coast’s economy may contract 7.5 percent this year, from growth of 2.6 percent in 2010, according to the IMF.

--Editors: Ana Monteiro, Linda Shen

To contact the reporter on this story: Chris Kay in London at ckay5@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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