Debt : successful strategy

18/06/2020
Debt : successful strategy

Second domestic debt reprofiling transaction in few months

The Ministry of Economy and Finance of the Togolese Republic announced on Wednesday the signature of a second euro loan facility raised on the international markets for an amount totaling approximately 150 million euros.

This transaction reflects the Togolese government’s strategy to reprofile certain domestic debts over longer maturities and at improved financial conditions . It benefits from a 100% insurance cover by the Africa Trade Insurance (ATI), of which Togo became a member in 2019. With a 10 year maturity and an overall cost of approximately 4.5%, this transaction demonstrates Togo’s credit quality as an international borrower, notably in this period of high volatility and investors’ increased risk aversion.

This second domestic debt reprofiling transaction, arranged by Société Générale, has been concluded, as the first one closed at the end of last year, in full compliance with the Togolese Republic’s commitments under its program with the IMF.

It will result in a debt service reduction over the next three years of more than 80 million euros, in addition to the approx. 50 million euros debt service reduction resulting from the reprofiling transaction closed in December 2019.

The liability management strategy implemented by Togo in these two transactions has resulted in the raising of more than 250 million euros on the international markets over 10 year maturities and at interest rates ranging between 4,5% and 4,75% and in the prepayment of short term domestic commercial debts with interest rates between 6.75% and 7.6%.

This successful strategy positions Togo as a referenced borrower on the  international markets, improves the country’s debt sustainability as required by the IMF and results in substantial debt service savings this year and over the next two years.

This strategy, together with the G20 debt service suspension initiative, will provide Togo with fiscal and liquidity room for maneuver to address the sanitary, social and economic crisis it is facing as many other countries in the world.

The Togolese Republic has been advised by Lazard Frères for this transaction.

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