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Ivory Coast Plans $2.9b in Debt Restructure

By Adeleke Adefioye


The Ivory Coast is seeking to restructure around 2 billion euros of debt with commercial creditors and may launch its new bonds as early as this year, the chair of the restructuring committee said.


The move would be the latest in a series of African steps to restructure debt, which has enabled the world's poorest continent to tap international capital markets again.

"We are in the middle of negotiations with the Ivorians," Thierry Desjardins, chair of the London Club committee of private creditors for the Ivory Coast said in a phone interview.



"We have had several meetings this year, the last one being in June. It is not excluded at all that we would be able to reach an agreement before year-end."

The Ivory Coast, the world's biggest cocoa exporter, has suffered as an investment destination because of political instability following a 2002-3 war.

It agreed a debt restructuring with Paris Club sovereign creditors earlier this year, involving the cancellation of $845 million in debt, the rescheduling of $1.23 billion and the deferral of debts worth $2.61 billion (www.clubdeparis.org).


It is also part of the Heavily Indebted Poor Countries (HIPC) initiative, a debt relief program managed by the International Monetary Fund and the World Bank.

The HIPC initiative aims to help Ivory Coast clear some $3 billion of its external debt, which was estimated at $14.3 billion at the end of 2007, according to the IMF.

Ivory Coast qualified for some relief in April but will qualify for more if it reaches so-called completion point by implementing a broad set of reforms over the next year.


Major Problem Political instability has dogged Ivory Coast's efforts to boost its economy. Elections have been repeatedly delayed due to rows about disarmament and voter identification. A poll is now set for November 29, but there is concern it will be delayed again.


Hope

Nevertheless, the promise of debt relief and a revival of interest in frontier markets as the global downturn eases could make Ivory Coast's restructured debt attractive, investors said.

"We like the recovery in the Cote d'Ivoire," said Francis Beddington, head of research at Insparo Asset Management.


"The economic recovery is quite robust at 3-3.5 percent growth -- we are quite positive on the economic and market outlook going forward."

The outstanding debt consists of three euro-denominated and three dollar-denominated bonds maturing in 2018 and 2028.


Desjardins said it was too early to define the terms of the new debt, but maturities were likely to be long-term.

"It is likely that most of the debt will be rescheduled over 20 years," he said. "We might have one or two bonds instead of six. It is more helpful for investors to have big instruments."


The Ivory Coast debt is likely to have an amortizing structure, where the principal is paid back in instalments. Lazard are financial advisers on the restructuring deal.

Iraq and Congo both launched long-term bonds with amortizing structures after restructuring commercial debt in recent years.


The Ivory Coast deal could represent the last major private creditor restructuring for some time, outside ongoing plans to restructure Kazakh bank debt, as other sovereigns are political hot potatoes.

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