Cote d'Ivoire

Country Summary

Macroeconomic performance

Real GDP growth reached an estimated 7.4% in 2018, down from 7.7% in 2017, supported by external demand for agricultural and oil products and stronger domestic demand resulting from major investment projects and households consumption. The economy faced several shocks in 2017, including a sharp decline in cocoa prices, higher oil prices, and social tensions. As a result, the budget deficit increased to 4.2% of GDP, but it improved to an estimated 3.8% in 2018. Public debt increased to 48.2% of GDP in 2018, driven by Eurobond issuances in 2017 and 2018. The risk of debt distress remains moderate. Inflation was low, at an estimated 0.5% in 2018, down from 1.0% in 2017. The current account deficit widened to an estimated 2.7% of GDP in 2018 from 1.8% in 2017.

The economic outlook remains favorable, with real GDP growth projected at 7.0% in 2019 and 6.9% in 2020. A good performance in the agricultural sector will keep inflation below the 3% convergence threshold for the West African Economic and Monetary Union (WAEMU). The current account deficit is projected to stabilize at 2.8% in 2019, in connection with sustained imports of capital goods related to infrastructure projects.

The economy remains vulnerable to external shocks that may stem from unfavorable evolution of commodity prices (mainly cocoa and oil) and adverse climate conditions. Another pressing challenge is to sustain economic growth and ensure a more balanced distribution across sectors, with a view to achieving a structural transformation of the economy. This would require improving the quality of agricultural products and upgrading the industrial sector toward higher value added and high–job creation activities.

Tailwinds and headwinds

Côte d’Ivoire has implemented many reforms as part of its 2016–2020 National Development Plan. In energy, reforms have focused on ensuring the sector’s financial sustainability, clearing arrears for independent producers, and investing in supply capacity. As a result, installed capacity increased by 56% between 2011 and 2018 to 2,200 MW. Rural electricity coverage has also expanded from 33% of the rural population to 54%. In agriculture, reforms have focused on accelerating the development of value chains and increasing local processing for major agricultural products, including cocoa, cashew nuts, palm oil, and rubber. Investment has also improved the quality of and access to basic education and health services. But poverty and inequality reduction remain a challenge.

Côte d’Ivoire is party to most of the relevant continental institutions dedicated to regional integration. The country has historically been an important destination for immigration and remains at the center of one of the continent’s most dynamic migration routes. Côte d’Ivoire is also an important transit corridor for its landlocked neighbors, thanks to its ports in Abidjan and San Pedro. It is a key partner in the regional electricity market and is part of an electricity interconnection network with Benin, Burkina Faso, Ghana, Togo, and soon Mali, as well as to the Mano River Union countries (Guinea, Liberia, and Sierra Leone). Côte d’Ivoire is the major player in WAEMU’s financial markets and hosts the regional securities exchange. Côte d’Ivoire has also increased investment in regional energy, road, and air infrastructure and telecommunication networks.

Source: African Economic Outlook 2019

Fixed Income

Issuance strategy 

Côte d’Ivoire’s objective is to reach the status of an emerging country by 2020, a goal that will require a debt management strategy that enhances economic performance over the coming years while preserving macroeconomic stability.The government will continue to favor Treasury bond issuances in the UEMOA market with potential additional sources include local-currency denominated eurobonds and Global Depository Notes.

According to the debt management strategy, the domestic debt will average 50% of the total debt over the period 2017-2021. These domestic resources are oriented 85% towards medium and long-term government securities issues, with a predominance of long-term securities (50%) and IMF budget support expected over the period from 2017 to 2019. This strategy meets in addition, mainly to the objectives of developing the internal debt market and limiting the exchange rate risk, under the constraint of the effective realization of projected financing and the challenge of emergence by 2020. 

Domestic Debt                                                       Average issues 2017-2021 (billion xof)
  • Tbill 1 an                                                     97.6
  • Bonds 2-5 ans                                             292.7
  • Bonds > 5 ans                                               536.5
 

Source:  tresor.gouv.ci

 

Yield curve

As part of its market development activities, the UMOA Titres Agency has carried out a project to set up issuers' yield curves of the Public Securities Market of the UEMOA zone (MTP) with objective:

  • to improve transparency on the MTP
  •  to contribute to better price formation during the auctions
  • to make investors aware of the relationship between primary and secondary markets
  • to provide local / international investors with a reference of price for securities issued by the States

The conditions for  yield curves constructions  have not yet all been observed on the (MTP). It was thus retained:

  • in the short term, to develop a first version of yield  curves taking into account the specificities of the MTP, while being sufficient evolutionary to support its development;
  • in the medium / long term, define the necessary ways and means to Continuous improvement yield curves models following the evolution of the MTP.

Cote d'ivoire  government securities yield curve extends to 10 years.

Yield curve calculation models 

The yield curve is constructed on the basis of primary market returns. The model used is the Nelson-Siegel Svensson .  

Interpolation methods 

Linear interpolation. 

Yield curve managed by

Agence UMOA-Titres is responsible for the yield curve. 

Display platform 

Agence UMOA-Titres website 

Challenges in building an efficient yield curve 

  • Fragmentation of the market

  • Narrow investor base: comprising homogeneous investors such as banks. 

  • Low liquid secondary market

Guide to Buying Bonds

Procedures for market participation

The primary subscription of Treasury bonds and bonds is reserved for credit institutions, management and intermediation companies (SGI) as well as regional financial institutions with a settlement account in the books of the Central Bank.

Other investors, natural or legal persons, irrespective of the State in which they are established, may also subscribe to Treasury bonds and bonds on the primary and secondary market through credit institutions and SGI. located in the territory of the Union.

Emissions on the primary market of the MTP (Marché des Titres Publics) are made by auction.Each issuance should be advertised at least 7 days before the auction by describing the issuance characteristics. Bidders submit to the Central Bank, sealed in a ballot box reserved for this purpose, a submission form specifying the amounts and the interest rates or the price offered. Submissions may also be made electronically in the conditions defined by the Central Bank.

Later than one hour after the deadline for bids submission, the National Directions of the BCEAO transmit electronically, by fax or any other means of rapid communication accepted by the Central Bank, the main submissions to the principal agency of the BCEAO, which is organizing the auction.

Treasury bills are eligible for refinancing by the Central Bank. Investors and the Central Bank may buy or sell Treasury bonds on the secondary market, awarded by private treaty. In this context, they are required to post the purchase price and sale, which they are willing to transact.

Bond issues can be done by  syndication  managed by CREPMF.[http://www.crepmf.org/Wwwcrepmf/Reglementation/pdf/Instructions/INSTRUCTION_N36_2009.pdf]

Treasury bonds can be traded on the secondary market. As such, they can be exchanged at the Regional Stock Exchange (BRVM) or outside the BRVM.

Settlement cycle

On the primary market by auction, the settlement date is T+1 of the issue date.On the secondary market, the payment of purchases of Treasury bonds and bonds by the primary subscribers is made by debiting their settlement account with the Central Bank on the value date of the issue of these securities. settlement date is the first business day following the conclusion of the transaction for domestic transactions and the third business day following the conclusion of the transaction for transactions between two (2) Member States. The Contracting Parties are free to agree on a term greater than these minima for the settlement of transactions, IF the instructions given by both parties are identical, the transaction is directly offset on the agreed value date. In the event of a discrepancy, the Central Bank suspends the transaction and notifies both parties of this decision for correction.

Taxation

In Cote d’Ivoire, the interest  on Treasury  Bonds is subject to a 10% debt income tax (IRC). Source [ https://www.tresor.gouv.ci/tres/fr_FR/presentation-des-bons-du-tresor/ ]

Interest on Bonds is subject to a 5% debt income tax (IRC). Source [ https://www.tresor.gouv.ci/tres/fr_FR/obligations-du-tresor-inscrit-en-compte-courant-a-laccd/ ]

Rating

Rating Agency Current rating Outlook
Moody’s No rating No outlook
Fitch B+ No outlook
Standard and Poor’s No rating No outlook

Primary Dealers

The securities market has a system of Specialists in Treasuries. The credit institutions and the SGIs  may be approved as SVT under the conditions specified by an Instruction of the Central Bank. As such, they must respect certain commitments that confer special advantages. These commitments and benefits are specified by an instruction from the Central Bank.

List of Primary Dealers

BANK OF AFRICA COTE D'IVOIRE

ABIDJAN PLATEAU, ANGLE AVENUE TERRASSON DE FOUGERES ET RUE GOURGAS

+22520303400

BANQUE REGIONALE DE MARCHES

Immeuble XL, 5ème étage x Avenue du Docteur Crozet et Boulevard de la République - Plateau

+22520307550

BIBE FINANCES AND SECURITIES

Avenue Jean-Paul II, Immeuble SIB, 5ème étage

+22921324875

BICI CI

AVENUE FRANCHET D’ESPEREY

+22520201600

CORIS BANK INTERNATIONAL

Boulevard de la république n° 23 Angle avenue Marchand

+22520209450

ECOBANK COTE D'IVOIRE

IMMEUBLE ALLIANCE AVENUE TERRASSON DE FOUGERES

+22520319200

HUDSON & CIE

8-9, AVENUE LAMBLIN, IMMEUBLE BIAO PLATEAU

+22520315500

SGI ATLANTIQUE FINANCE

IMMEUBLE MACI, 10eETAGE ENTREE ATLANTIQUE ASSURANCE

+22520315975

SIB

34 BD REPUBLIQUE, IMMEUBLE ALPHA 2000

+22520200000

UNION TOGOLAISE DE BANQUE

BOULEVARD DU 13 JANVIER NYEKONAKPOE

+22822234300

Market restrictions

Openness to international investors

No restrictions prevent foreign investors from trading in the public securities market. They may subscribe to Treasury bonds and bonds on the primary and secondary markets through credit institutions and SGI located within the Union.  

Capital controls

There are no significant limits on foreign investment nor are there generally differences in treatment of foreign and national investors, either in terms of the level of foreign ownership or sector of investment.

Restriction on FX and profit repatriation

WAEMU has unified foreign exchange regulations. Under these regulations, there are no restrictions for transfers within the community, and designated commercial banks are able to approve routine foreign exchange transactions inside the community. The transfer abroad of the proceeds of liquidation of foreign direct investments no longer requires prior governments approval.

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