Benin Targets $1 Billion Bond Issuance, Featuring Inaugural Sukuk

Benin held investor meetings in London for a multi-tranche international bond that would include its first seven-year sukuk. The deal could reach about $1 billion and may reopen two outstanding Eurobonds due 2038 and 2041. Fitch revised Benin’s sovereign outlook to positive while affirming its B+ foreign-currency rating. Beninese officials held a series of meetings in London last week to prepare a multi-tranche international bond issue that would include a seven-year sukuk, market sources said. The transaction would mark the first sovereign sukuk from a sub-Saharan African state since South Africa’s issue in 2014. Rating agencies assign Benin a B1 rating from Moody’s, BB- from S&P, and B+ from Fitch. The West African country is considering a 144A/Reg S structure that would combine a sukuk with a possible reopening of two conventional bonds. The first tranche totals $750 million, matures in February 2038, and carries a 7.960% coupon. The second tranche totals $500 million, matures in January 2041, and pays an 8.375% coupon. Market participants familiar with the transaction said the total size of the operation could reach about $1 billion. A banking syndicate led by Citi, Emirates NBD Capital, HSBC, and JP Morgan acts as global coordinators and joint bookrunners. Arqaam Capital serves as co-bookrunner, while Emirates NBD Capital and HSBC structure the sukuk. Authorities have studied the sukuk project for several months, and the plan now appears to benefit from favorable market conditions. The operation primarily aims to broaden Benin’s funding mix. Fitch describes the country’s public debt structure as solid, with an average maturity of 9.3 years, an almost entirely fixed-rate profile, and more than half on concessional terms. Fitch also points to an average borrowing cost of 3.4% at end-2025 and limited exposure to interest-rate or currency shocks, as most debt remains denominated in CFA francs or euros. The planned issuance follows a failed coup attempt in early December, an event that market participants said did not undermine international investor appetite. Fitch Ratings on Friday revised the outlook on Benin’s long-term foreign-currency sovereign rating to “positive” while affirming the rating at B+. Benin last tapped international markets in January 2025, when it raised $500 million through a conventional amortizing bond due January 2041 with an 8.625% coupon. Investors placed orders exceeding $3 billion for that transaction. The global sukuk market continues to expand, and Fitch Ratings reported rising issuance volumes in 2025. Citi said stronger links between sub-Saharan Africa and the Gulf could attract new African issuers to a market still dominated by Gulf investors. Several African countries are exploring Islamic finance instruments. Nigeria secured parliamentary approval in October 2025 for a planned $500 million international sovereign sukuk, which would also represent its first global sukuk. Senegal has also announced plans to issue a benchmark international sukuk in 2026.