Senegal plans to sell as much as 800 million euros ($880 million) of offshore bonds next year after yields on the country’s debt fell to a record low.

The West African nation will use the proceeds to fund new infrastructure and loans given to the state power utility, Economy, Planning and International Cooperation Minister Amadou Hott, 47, said in an interview in Johannesburg. Similar to when Senegal issued foreign debt in 2018, the notes will be denominated in euros to avoid currency-risk costs, he said. The euro is the peg for the West African CFA franc, the common tender of Guinea-Bissau and seven francophone nations in the region.

The price of Senegalese debt fell below the average of Africa’s sovereign issuers for the first time in the quarter through March as its economic growth forecasts outpace those of continental peers. The 1 billion euros of 2028 notes that Senegal sold at 4.75% in March last year yielded 4.16% at 4:13 p.m. in Dakar, the capital, on Wednesday.

“This kind of yield will help us to sell a favorable Eurobond,” said Hott.

Even so, the government hasn’t made a final decision and the eventual size of the issuance will depend on how much debt Senegal sells on the regional market in local currency, Hott said. “We are still working out the mix between the local currency and the portion that will be in euros.” he said.

An early bond sale in 2020 could help Senegal benefit from a four-year rally in emerging markets that shows no sign of slowing, especially with major central banks still a long way off reversing their monetary-easing policies.

Senegal’s economy is on course to expand at 6% or more for a sixth straight year in 2019 as the government of President Macky Sall has built large infrastructure projects including a new international airport and public transport to facilitate further growth in one of Africa’s most stable democracies. Since 2008, gross domestic product has expanded 42%, outperforming the global and sub-Saharan Africa average.

A string of major discoveries off the coast means Senegal will become an oil and gas exporter in coming years. The government expects production to start as early as 2021 and it stands to receive more than $30 billion over the next 30 years from two of its offshore reserves, according to state-run oil company Petrosen.

The government will use some of the gas to feed power plants as it seeks to reduce the cost of electricity. The nation has one of the highest power-production costs in Africa, according to a 2017 study by Deloitte.

In September, the state provided a loan to the Senegalese National Electricity Agency to offset deferred power-price increases, Hott said. The minister served as the African Development Bank’s vice president for power and energy before he was appointed in April.

“Our strategy is to push down the price of electricity and have the lowest possible tariffs,” Hott said. “Especially now that Senegal is becoming a gas producer, we want to be able to supply power through a gas plant, and encourage businesses to move to gas and away from diesel.”

Source: Bloomberg Africa