Ivory Coast, the world’s leading cocoa producer, has overtaken South Africa to become the best-rated sovereign in sub-Saharan Africa with outstanding foreign debt.
S&P Global Ratings affirmed both countries at BB- on Friday, but Ivory Coast’s outlook was upgraded to positive, while South Africa’s outlook remained stable.
The yield on Ivory Coast’s debt maturing in 2028 dropped 13 basis points to 7.09% as of 12 p.m. in London on Monday, marking its lowest level since April 15. In contrast, South Africa’s dollar debt due in 2030 was trading at a yield of 6.9%, down from over 8.5% as recently as October.
“The rating trajectory of Côte d’Ivoire over the past ten years has been impressive, reflecting the country’s economic turnaround over the period,” said Samir Gadio, head of Africa strategy at Standard Chartered. “Many other African sovereigns have been downgraded over that period.”
In January, Ivory Coast broke sub-Saharan Africa’s nearly two-year hiatus from international capital markets by issuing $2.6 billion in eurobonds. The country’s economy, one of the fastest-growing in the region, is projected by the International Monetary Fund (IMF) to expand by 6.5% in 2024, up from 6.2% in the previous year.
Despite declining cocoa production and downgraded forecasts, Ivory Coast secured a $4.8 billion funding agreement with the IMF, strengthening its finances and reserves. S&P expects commodity exports to increase over the next two years.
“The positive outlook reflects our view that, over the next 24 months, rising commodity exports could lead to a more significant reduction in external and fiscal imbalances than in our base case,” said primary credit analyst Sebastien Boreux in S&P’s statement. “This could be accompanied by high economic growth, benefiting from economic reforms, donor support, and monetary and political stability.”
