Benin: AA- rating from Bloomfield and its implications for Treasury borrowing

The significance of this rating differs from that of an international rating. Moody’s raised Benin’s sovereign rating from B1 to Ba3 in August, but Ba3 remains three notches below the investment category on its scale.

For the Beninese Treasury, Bloomfield’s rating is particularly relevant in the regional market. The 2026 borrowing strategy anticipates a financing need of 1,138 billion CFA francs, of which 595.6 billion is expected to come from domestic resources.

A better perception of risk may bolster demand from banks, insurance companies, and institutional investors within the West African Economic and Monetary Union (UEMOA). However, it does not guarantee a decrease in yields, which also depend on banking liquidity, the monetary policy of the BCEAO, the maturities offered, and the volume of competing issuances.

The local rating does not alter the status of Eurobonds.

Bloomfield assesses a state’s ability to meet its obligations in the reference currency of the rating. On its long-term scale, AA- falls within the investment category and corresponds to a very low risk assessment.

International investors also consider the availability of foreign currency, the need for external refinancing, the structure of the debt, and global financial conditions. It is on this basis that Moody’s maintains Benin in the speculative category despite its upgrade to Ba3.

The IMF has revised the central government’s debt to 60.5% of GDP by the end of 2024 following the reintegration of several loans transferred to public enterprises and other statistical corrections. Nevertheless, the Fund continues to classify the country at moderate risk of over-indebtedness.

The IMF also recommends gradually rebalancing the portfolio towards domestic debt to limit the risk of external refinancing. An improved local rating can accompany this direction without altering the criteria applied to international issuances.

The 2026 financing plan presents an immediate challenge for the AA- rating.

Benin has already approached international markets in January with a $500 million seven-year sukuk and the reopening of its 2038 Eurobond for an additional $350 million. The pricing of these instruments depends on global rates and the country’s international risk premium.

In the regional market, the AA- rating may alter the comparison between Benin’s signature and those of other sovereign issuers in the UEMOA. Its real effect will become evident in the demand and yields observed during upcoming issuances in CFA francs.

The 2026 borrowing strategy allows for up to 1,600 billion CFA francs in new loans based on disbursement and sets a ceiling of 300 billion CFA francs on the guarantees that the state can provide.