Fitch Ratings has pushed Gabon deeper into junk territory, citing widening fiscal deficits and weakening investor appetite for the country’s debt.
- Fitch Ratings downgraded Gabon’s long-term foreign-currency rating to CCC- from CCC due to fiscal challenges.
- Reasons cited include widening budget deficits, limited regional debt market access, and heavy debt repayments.
- Investor interest in Gabonese bonds has dwindled, with auction participation ratios below 50%.
- Gabon is aiming to address arrears and governance through measures like auditing mining contracts.
Fitch Ratings has pushed Gabon deeper into junk territory, citing widening fiscal deficits and weakening investor appetite for the country’s debt.
The ratings agency said it downgraded Gabon’s long-term foreign-currency rating to CCC- from CCC, marking the second cut this year.
Fitch pointed to mounting liquidity pressures driven by larger budget shortfalls, constrained access to the regional debt market, limited financing from official creditors and heavy debt repayments.
DON’T MISS THIS: South Africa leads Africa in total wealth as millionaires, markets, and metros drive growth
According to Fitch, “Widening fiscal deficits, increasingly limited regional debt market access, a dearth of official creditor financing and high amortisations have resulted in severe strains on domestic and external government liquidity and rising arrears.”
Bond demand weakens
The agency had already downgraded Gabon in January, citing similar fiscal constraints, including restricted market access and growing arrears to creditors, Reuters reported.
On Friday, Fitch noted that investor demand for Gabonese bonds has continued to deteriorate, with several auctions this year recording bid-to-cover ratios of less than 50%.
The downgrade comes as Gabon seeks to clear arrears with some partners following the April presidential election victory of Brice Oligui Nguema, the army general who took power in a 2023 coup.
DON’T MISS THIS: Airtel Africa taps Elon Musk’s Starlink to launch direct-to-cell service in 14 African markets
The government announced this week that it will launch an audit of mining contracts as part of its efforts to strengthen governance, while holding talks with the International Monetary Fund over a potential new lending programme.
The agency said prospects for a new programme are hindered by the government’s expansionary fiscal stance, the continued accumulation of external arrears and the “likely requirement of drastic and unpopular policy changes.” Gabon’s previous IMF programme was suspended after Nguema seized power.
Fitch forecasts government debt will climb to 80.4% of gross domestic product this year and 85.5% in 2026, warning that limited transparency means the actual figures could be higher than projected.
