Gabon’s Dollar-Denominated Bond Takes a Tumble Following Military Takeover

Gabon’s military coup sparked aggressive selloffs in its dollar-denominated bonds on Wednesday. The bond maturing in 2025 had the biggest drop, dipping by 14 cents but mildly recovered by 8.5 cents at the end of the trading session. This sharp slump was last experienced during the COVID-19 market rout in March 2020. Analysts believe foreign investors priced in the risk of possible sanctions on the country’s ability to redeem its obligations amidst all other factors. The rapid rise in military coups in Africa recently might dispel foreign investors (FPIs & FDIs) in the continent going forward, affecting subscriptions in new bond issuances and spurring selloffs in existing bonds. Investors will become highly cautious as continental risks widen beyond mounting debt, rapid currency depreciation, huge infrastructural deficit, and insecurity