Ivory Coast bonds sank to a record low 36 cents on the dollar on speculation the West African nation will be in default on $2.3 billion of securities today.
While the International Monetary Fund said the nation had $3.28 billion of foreign-currency reserves as of September, the government is unlikely to make the $29 million interest payment initially due Dec. 31 before a 30-day grace period expires, said Felix Dornaus, who holds Ivory Coast bonds at Erste Sparinvest KAG in Vienna. President Laurent Gbagbo, 65, and his rival Alassane Ouattara, 69, who both claimed victory in the November elections, say the other is responsible for the payment.
A “last minute payment cannot be excluded, but is very unlikely,” Dornaus, who helps manage about 1.4 billion euros ($1.9 billion) in emerging-market debt, said yesterday. Thierry Desjardins, the Paris-based chairman of the London Club group of commercial bank creditors that hold Ivory Coast debt and vice president of sovereign debt restructuring at BNP Paribas SA, said he was unaware of any payment being made.
The Emerging Markets Traders Association in New York posted a “market practice recommendation” for Ivory Coast bonds on its website yesterday, following consultations with “major market participants.” The bonds should, unless otherwise agreed, trade “flat” and settle at an all-in price without additional payment for accrued interest. Buyers will be entitled to unpaid interest and related claims, according to the recommendation.
Ivory Coast Defaults
Not much to add to the following Bloomberg report, except maybe the now common "I told you so". Once this overbullish and irrational exuberance settles, and the markets get sober again, equities and commodities will hit the wall of reality: we are not in V-shaped recovery. We are in the midst of the Greater Depression.