Gabon’s dollar-denominated bonds experienced a significant decline on Wednesday after the military announced that they had seized power in the west African nation, according to Tradeweb data. The 2025 maturity bonds experienced the largest drop, before slightly recovering and trading down 12.488 cents on the dollar at 80.423 cents. The two 2031 maturities also saw declines of around 9 cents.
In the early hours of Wednesday, a group of senior military officers in Gabon claimed to have taken control of the government, shortly after President Ali Bongo was declared the winner of a third term by the country’s election body.
Earlier this month, Gabon completed a $436 million “debt for nature” swap, exchanging portions of the 2025 and 2031 Eurobonds for a “blue bond” that matures in 2038. The blue bond fell 2.25 cents on the dollar to 98 cents.
Charlie Robertson, the Head of Macro Strategy at FIM Partners, highlighted the potential risk of sanctions on bondholders, stating, “The immediate risk to bondholders is that sanctions are imposed that complicate things. If you sanction Gabon, does that complicate payments? I imagine it will.”
According to Robertson, the consequences of the military coup will have a negative impact on all bond issuance in Sub-Saharan Africa, including green and blue bonds.
The “blue bond” was originally intended to generate savings for marine conservation and has political risk insurance from the U.S. Development Finance Corporation (DFC). The DFC and The Nature Conservancy, a U.S. environmental organization involved in the deal, did not immediately provide comment. Bank of America, the arranger of the bond, declined to comment.