- African nation’s dollar bonds post biggest declines on record
- Shares of French, Norwegian firms with Gabon operations sold
Gabon’s international bonds sank the most on record and shares of foreign companies with operations in the country tumbled as a military coup spooked investors in its oil sector and its debt linked to conservation projects.
Dollar bonds due 2025 and 2031 posted the biggest declines among emerging-market peers, with some analysts predicting the selloff may spill over to other African countries with high political risk. European stock markets joined the selloff, with mining group Eramet SA, oil-and-gas producer Maurel & Prom and a listed unit of TotalEnergies SE falling amid increased trading volumes.
The seizure of power, the ninth in Africa in the past three years, highlights the uncertainty of investing in frontier nations at a challenging time for the global economy when elevated inflation is spurring voter dissatisfaction and boosting political risk. It undermines not only the outlook for Gabon’s bonds, but could also have spillover effects of the debt securities of neighbouring countries, including Cameroon, said Mark Bohlund, senior credit research analyst at REDD Intelligence.
“Central Africa does not have the same recent history of military coups as West Africa but I still think there will be concern of contagion,” he said. “In Cameroon and Republic of Congo in particular, there is a similar discontent with the long-time rule and the prospects of a dynastic transitions.”
© Bloomberg
