Mali: Back on the financial market of UMOA

By Maher Hajbi
Posted on Wednesday, 10 August 2022 12:44

The headquarters of the Central Bank of West African States (BCEAO), in Bamako, Mali, in August 2020. © Annie Risemberg / AFP.

Mali’s Treasury is launching a CFAF 270bn loan on 9 August, one month after the Ecowas economic and financial sanctions were lifted. But what are its chances of success?

At a time when discussions on the 2023 finance law are continuing in Bamako, the Malian authorities are working hard to get the country back on the financial market of the West African Monetary Union (UMOA).

The objective? To raise CFAF 270bn (€410m) through the issuance of “support and resilience bonds but also assimilable recovery bonds”.

This operation, which is the largest of its kind ever carried out by the Malian Treasury, should serve to repay the debt arrears accumulated in recent months, while the country was under economic and financial embargo by the Community of West African States (ECOWAS).

Mali’s return to the regional government securities market, scheduled for 9 August, comes eight months after the country’s last exit in December 2021. At the time, the ruling junta, led by Assimi Goïta, had successfully raised CFAF 20.2bn. However, the new operation, which is currently being prepared, looks complicated.

A downgraded sovereign rating

Following the implementation of ECOWAS sanctions (from 9 January to 3 July) and the accumulation of debt repayment arrears, Bamako’s sovereign rating has been downgraded in recent months.

In this uncertain context, the US agency Moody downgraded Mali’s rating to Caa2 with a “negative” outlook. Is this enough to scare off market players?

“This initiative of the Malian authorities is rather daring, given that the country is part of a political and security context that weakens its public finances,” says financial analyst Christian Kouamé Zegbe.

Resumption of debt payments

Although he expects “a complicated operation” because of the drop in investor confidence due to payment arrears, Zegbé is nevertheless “optimistic”.

The reason for this is “the return of Malian banks to the forefront and Bamako’s ability to honour its debts after the recent lifting of the freeze on its assets.”

As a matter of fact, Malian banking institutions contributed in mid-July 2bn CFA francs out of the 38.33bn CFA francs that Senegal managed to raise on the public securities market.

“Following the payment of some past maturities, Mali is reassured of its willingness to meet its commitments and the operation will have a better chance of success,” said the financial analyst, who believes that the Malian machine will be able to restart now that Ecowas financial and economic sanctions have been lifted.

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