By Tosin Sulaiman
JOHANNESBURG, Dec 5 (Reuters) - Gabon raised $1.5 billion through a new 10-year Eurobond and a partial buyback of its existing 2017 issue on Thursday that will enable it to reduce borrowing costs and fund an ambitious public investment programme.
The bond was issued with a yield of 6.375 percent and the order book exceeded $1.8 billion, a market source told Reuters.
The mineral-rich central African nation had offered to buy back up to $140 million of the outstanding 2017 Eurobond and to exchange any or all of the old bonds for the new issue.
In the end, bondholders delivered some $610 million through the tender and exchange offer, while $890 million of new cash was raised. Citigroup, Deutsche Bank and Standard Chartered are lead managers on the deal.
Gabon's return to international capital markets caps a year of record issuance by African sovereigns who had raised $8 billion since the start of the year, according to a report by Moody's published in October.
Rwanda issued a debut $400 million 10-year Eurobond in April, while Nigeria and Ghana returned to the market in July, raising $1 billion each.
Kenya is expected to launch its maiden dollar bond next year and plans to hold roadshows in January for the $1.5 billion issue.
The Gabon deal enables the country to reduce its borrowing costs and extend the maturity profile of its debt.
Its debut $1 billion Eurobond yielded 8.2 percent when it was issued in 2007 to fund a buyback of old Paris Club debt. The bond, which was nearly 2 1/2 times oversubscribed, is currently trading around 3.5 percent.
Proceeds of the new issue will be used to fund infrastructure projects in the transport and power sectors, according to a preliminary prospectus. Those include development of a bypass road and a dam and completion of a road connecting the capital Libreville with the city of Franceville.
The projects form part of the government's public investment programme begun in 2009 to diversify the economy away from oil, which accounts for 40.5 percent of Gabon's GDP, and to transform it into an emerging market economy by 2025.
Gabon's resource wealth and small population of about 1.6 million mean it has one of the highest per capita incomes in sub-Saharan Africa, but inequality is high and large numbers of people remain mired in poverty.
The country is rated BB- by Fitch and Standard and Poor's.
The IMF projects GDP growth of 6.6 percent in 2013 and 6.8 percent next year. But IMF projections point to a worsening fiscal picture. Gabon's budget deficit is expected to widen from 1.7 percent of GDP in 2012 - the first gap in over a decade - to 5 percent in 2015.
However, the prospectus said the government expects a budget deficit in 2013 and a budget surplus in 2014.
(Reporting by Tosin Sulaiman; Editing by Pascal Fletcher) Keywords: GABON EUROBOND/
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