Congo Republic sells first Eurobond in nearly 20 years

By Libby George

LONDON, Nov 5 (Reuters) - Congo Republic issued a $670 million Eurobond, its first in nearly two decades on Wednesday and said it is in talks for a possible debt-for-nature swap.

The central African oil producer has been working to ease its debt strains and servicing costs and said the proceeds of the bond will be used to refinance part of the domestic market debt maturing between November 2025 and February 2026.

"We have had some discussions, both with the rating agencies as well as some investors regarding our trajectory and our policies, and everything has been very, very positive," Finance Minister Christian Yoka said in an interview.

He added that the government limited the size of the bond in order to keep the costs low and focus on fiscal sustainability.

"The purpose of the transaction is really to work on refinancing this short-term domestic debt. And it doesn't pursue any other goals."

The bond will carry a 9.875% coupon and mature in November 2032. A finance ministry spokesperson said pricing took place on Tuesday and the bonds would start trading shortly.

The country last issued a Eurobond - its first ever - in 2007, as part of a restructuring.

Nigeria launched a new Eurobond sale on Wednesday, following on from Angola and Kenya last month, as spreads for the countries narrowed and investor appetite boomed.

Yoka, who spoke from Belem, Brazil, where he will attend the COP30 meetings, said the country was in talks for a potential debt-for-nature swap and was focused on concessional loans and other low-cost financing to bring the debt-to-GDP ratio to 70% by 2029.

"Going on the commercial terms is not our first choice," he said of future debt issuance.

Brazzaville's debt-to-GDP ratio stood at 96% at the beginning of the year and Yoka said in January that local currency debt was the most pressing issue.

Last year, Congo implemented a regional debt exchange that prompted ratings agencies S&P Global Ratings and Fitch to lower their local currency rating to selective or restricted default.

This issuance, a ministry spokesperson said, was designed to ease liquidity in the Central African Economic and Monetary Community region, and the proceeds would gradually repay domestic debt lines as they mature, with no early buyback.

Ratings agency S&P said the bond sale would reduce short-term financing risks and "ease the government's tight liquidity conditions," but flagged that it is unlikely that the country can meet all of its funding needs via international capital markets.

Yoka also said Brazzaville was working to diversify its economy towards agriculture and tourism to cut reliance on oil, and that growth in the mining sector - mainly potash but also copper and gold - could also help boost state coffers.