The European Union’s defense ministers are scheduled to deliberate on the unfolding situation in Gabon, stated foreign policy leader Josep Borrell on Wednesday. He expressed concerns that if confirmed, the coup would escalate instability across the region.
In the early hours of Wednesday, a group of senior Gabonese military officers appeared on national television, announcing their assumption of power after the state election body declared President Ali Bongo’s third-term victory. Borrell, addressing EU defense ministers in Toledo, commented, “If this is confirmed, it is another military coup which increases instability in the whole region.”
He highlighted the domino effect on neighboring countries, saying, “The whole area, starting with Central African Republic, then Mali, then Burkina Faso, now Niger, maybe Gabon, it’s in a very difficult situation and certainly the ministers… have to have a deep thought on what is going on there and how we can improve our policy in respect with these countries.”
Borrell emphasized the significance of this matter for Europe, noting that the military-driven events have the potential to disrupt alliances, as demonstrated by Niger’s rapid distancing from France following its coup.
The repercussions of the coup extended to Gabon’s financial markets as its dollar-denominated bonds plummeted by up to 14 cents upon the military’s announcement. Specifically, the bonds with a maturity date of 2025 witnessed the most significant drop, albeit partially recovering by 2 cents. The 2031 maturities also experienced around a 9-cent decrease.
Earlier this month, Gabon executed a $436 million “debt for nature” swap, exchanging segments of the 2025 and 2031 Eurobonds for a “blue bond” maturing in 2038. The blue bond’s value decreased by 2.25 cents on the dollar, raising concerns about the immediate risks faced by bondholders due to possible sanctions. Charlie Robertson, Head of Macro Strategy at FIM Partners, expressed concerns about the impact of sanctions on Gabon’s financial interactions with the global economy.
Robertson’s analysis extended to Sub-Saharan Africa, stating that the Gabon crisis would adversely affect bond issuance in the region, including green and blue bonds. The “blue bond,” originally intended to fund marine conservation efforts, is supported by political risk insurance from the U.S. Development Finance Corporation (DFC).
While the situation is complex, the DFC and The Nature Conservancy, a U.S. environmental organization involved in the deal, remained silent when requested for comment. Bank of America, the orchestrator of the bond deal, also declined to offer insights.
The suspected coup in Gabon emerges shortly after Niger experienced a similar incident with the presidential guard seizing power and establishing a junta. As the situation in Gabon unfolds, observers and stakeholders are left contemplating the most effective strategies to address the growing coup concerns in Africa.
