CEMAC's Alarming Debt Surge: Treasury Hits XOF 10.56 Trillion Amidst Rising Yields

The six-nation Central African Economic and Monetary Community (CEMAC) region has witnessed a significant increase in its outstanding Treasury securities, reaching XOF 10.56 trillion at the end of July. This figure represents a 3.34% rise from XOF 10.22 trillion recorded in June, according to data from the Bank of Central African States. This surge has consequently pushed the market debt ratio to 13.3% of the regional GDP, an increase from 12.9% a month prior and 12% at the close of 2025.

Gabon emerged as the region's largest issuer, with XOF 3.42 trillion in outstanding securities, demonstrating the most substantial increase in nominal terms during July. It was followed by Congo, with XOF 3.04 trillion, and Cameroon, with XOF 2.06 trillion. Other nations like the Central African Republic and Chad also saw their outstanding debt increase, while Equatorial Guinea experienced a slight decline of 1.55%.

This increased demand for funding from governments led to a rise in borrowing costs across the region. The average interest rate on new securities climbed to 8.53% in July from 8.29% in June. Notably, the average rate on Gabonese Treasury bonds increased from 9% to 10.13%, while Cameroon's rate surprisingly fell to 7.36%. This divergence highlights a widening gap in the rates investors demand from different CEMAC governments, reflecting varying perceptions of risk and creditworthiness.

Despite the rising costs, demand for new issues showed some improvement, with the average subscription rate rising to 76.23% from 72.44% in June. Treasury securities specialists also increased their participation rate to 22.05% from 20.13%. However, these figures are still considerably lower than earlier periods in the market's development, such as 2018, when average subscription rates often exceeded 200%, indicating a shift in investor demand as the market has expanded.

The investor base for CEMAC Treasury securities is also undergoing a significant transformation. Primary dealers now hold XOF 6.80 trillion, accounting for 64.4% of outstanding securities, a notable decrease from 80.8% in 2018. In contrast, institutional investors have increased their holdings to XOF 2.15 trillion, representing 20.4% of the total, a substantial rise from their near-zero share eight years ago. Individuals also hold XOF 379.9 billion. This broader investor base allows governments access to a more diverse pool of capital as issuance grows, though the higher rates suggest these new buyers require greater compensation for their lending.

In summary, CEMAC governments are increasingly relying on the regional market for borrowing, but July's data underscores that this funding is becoming both more expensive and less readily available. The continuous rise in outstanding securities, now at 13.3% of regional GDP, from 12% at the end of 2025, aligns with a trend observed since 2021. The average cost of new borrowing reaching 8.53%, with Gabon paying over 10% on its Treasury bonds, is a critical concern. Higher yields translate to increased future interest costs, potentially reducing the budget available for public services and vital investments. The 76.23% subscription rate indicates that investors are becoming more selective, compelling governments to compete more vigorously for available savings. The evolving ownership structure, with institutional investors now holding a significant share of the debt, could enhance market depth and reduce reliance on traditional banks. The central challenge remains whether this expansion of the investor base can keep pace with the ongoing increase in government borrowing. Should issuance continue to outstrip demand, persistent high yields and escalating refinancing pressures across the region are likely outcomes.