[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ custom_padding=”||2px|||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″ text_font=”Celias – medium||||||||” text_font_size=”25px”]<\/p>\n
Good News for C\u00f4te d\u2019Ivoire\u2019s Government Bonds?<\/p>\n
[\/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″ text_font_size=”20px”]<\/p>\n
The recent sharp rise in cocoa prices could prove to be a boon for C\u00f4te d\u2019Ivoire\u2019s government bonds. While other cocoa-producing countries, such as Ghana, are struggling with declining harvests, the positive price effects could more than offset the moderate decline in output in C\u00f4te d\u2019Ivoire, strengthen the country\u2019s current account balance in the long term, and have a positive impact on the risk premiums on its government bonds.The recent sharp rise in cocoa prices could prove to be a boon for C\u00f4te d\u2019Ivoire\u2019s government bonds. While other cocoa-producing countries such as Ghana are struggling with lower harvests, the positive price effects could more than offset the moderate decline in output in C\u00f4te d\u2019Ivoire, strengthen the country\u2019s current account balance in the long term, and have a positive impact on the risk premiums on its government bonds.<\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font=”Celias – medium||||||||” text_font_size=”21px” sticky_enabled=”0″]<\/p>\n
Background<\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” custom_padding=”||20px||false|false” global_colors_info=”{}” theme_builder_area=”post_content”]The rise in cocoa bean prices has caused a stir in recent weeks: While prices (COCOCPUS Index) averaged USD 2,400\/t in 2022, they have risen to over USD 10,000\/t in recent weeks.[1]<\/b><\/span> Not Every Producer Benefits<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” custom_padding=”||20px||false|false” global_colors_info=”{}” theme_builder_area=”post_content”]Cocoa production is concentrated in a few African countries, particularly C\u00f4te d\u2019Ivoire and Ghana, which accounted for 34% and 17% of global production, respectively, in 2022. In addition, Ghanaian cocoa producers fear a 40% decline in the upcoming harvest, while in C\u00f4te d\u2019Ivoire, cocoa bean contract sales for the 2023\/24 season are expected to be only 18% below the volume of the previous season.<\/p>\n We expect that, for C\u00f4te d\u2019Ivoire, the positive price effect will more than offset the decline in volume. The net effect should be reflected positively in C\u00f4te d\u2019Ivoire\u2019s current account balance, as the country has struggled with rising current account deficits in recent years.[4]<\/b><\/span>[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font=”Celias – medium||||||||” text_font_size=”21px” sticky_enabled=”0″]<\/p>\n Euro High Yield Performance 2024 [\/et_pb_text][et_pb_image src=”https:\/\/ha-gim.com\/wp-content\/uploads\/2024\/07\/cote-divoire-leistungsbilanz-e1788958411465.png” title_text=”C\u00f4te d\u2019Ivoire Current Account Balance” _builder_version=”4.27.7″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” align=”center” sticky_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” text_font_size=”14px” global_colors_info=”{}” theme_builder_area=”post_content”]Source: International Monetary Fund<\/a>[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_2_font_size=”25px” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font=”Celias – medium||||||||” text_font_size=”21px” sticky_enabled=”0″]<\/p>\n Conclusion:<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” custom_padding=”||20px||false|false” global_colors_info=”{}” theme_builder_area=”post_content”]In our view, it will take years for the cocoa bean supply shortage to be resolved. While Ghana is suffering from sharp declines in harvests, the price effect is likely to more than offset the moderate harvest declines in C\u00f4te d\u2019Ivoire and have a positive impact on the country\u2019s current account balance\u2014not only this year but also in the coming years\u2014while supporting sovereign bond risk premiums.[\/et_pb_text][et_pb_divider _builder_version=”4.27.0″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_divider][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” text_font_size=”14px” global_colors_info=”{}” theme_builder_area=”post_content”][1]<\/span><\/b> Source: Bloomberg, HAGIM\u2019s own calculations Price losses due to rising yields and\/or increased risk premiums are possible. Even a total loss cannot be ruled out. Past performance is not indicative of future results, nor can future performance be guaranteed.<\/p>\n [\/et_pb_toggle][et_pb_toggle title=”Disclaimer” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#000000″ open_icon_color=”#000000″ _builder_version=”4.27.0″ _module_preset=”default” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n This marketing communication, as defined by the Securities Trading Act, is provided solely for informational purposes and should not be construed as personal investment advice, a recommendation, or a solicitation to buy, sell, or hold a financial instrument, or to adopt an investment strategy.<\/p>\n The opinions and statements contained in this document reflect the current assessment as of the date of publication. The information provided does not constitute a complete analysis of all material facts relating to a country, region, or market.<\/p>\n Any statements regarding market developments, returns, price gains, or other capital appreciation, as well as risk metrics, are merely forecasts for which we assume no liability. In particular, past performance, simulations, or forecasts are not a reliable indicator of future performance. Asset values may rise or fall. [\/et_pb_toggle][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" The recent sharp rise in cocoa prices could prove to be a boon for C\u00f4te d\u2019Ivoire\u2019s government bonds. While other cocoa-producing countries such as Ghana are struggling with lower harvests, the positive price effects could more than offset the moderate decline in output in C\u00f4te d\u2019Ivoire, strengthen the country\u2019s current account balance in the long term, and have a positive impact on the risk premiums on its government bonds.<\/p>\n","protected":false},"author":1,"featured_media":3063,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"none","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"both","_seopress_redirections_param":"","_seopress_redirections_type":301,"_seopress_analysis_target_kw":"","_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[38,34],"tags":[],"class_list":["post-8358","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-emerging-markets","category-specialist-article"],"_links":{"self":[{"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/posts\/8358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/comments?post=8358"}],"version-history":[{"count":2,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/posts\/8358\/revisions"}],"predecessor-version":[{"id":8360,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/posts\/8358\/revisions\/8360"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/media\/3063"}],"wp:attachment":[{"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/media?parent=8358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/categories?post=8358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ha-gim.com\/en\/wp-json\/wp\/v2\/tags?post=8358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
The main reason for the price increase is supply shortages caused by unfavorable weather conditions and the spread of a viral disease specific to cocoa trees in major producing countries. It takes several years for newly planted cocoa trees to produce beans, so supply shortages cannot be resolved quickly.[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font=”Celias – medium||||||||” text_font_size=”21px” sticky_enabled=”0″]<\/p>\n
While cocoa and cocoa products accounted for 28% of C\u00f4te d\u2019Ivoire\u2019s exports,[2] <\/b><\/span>Ghana is a much more diversified exporting country. Cocoa and cocoa products accounted for only 9% of exports in 2022.[3]<\/b><\/span><\/p>\n
C\u00f4te d\u2019Ivoire Current Account Balance<\/p>\n
\n[2] Source<\/span><\/b>: Observatory of Economic Complexity OEC<\/a><\/b>
\n[3]<\/span><\/b> Source: Food and Agriculture Organization of the United Nations<\/a><\/b><\/span>
\n[4]<\/span><\/b>www.nasdaq.com\/articles\/ivory-coast-expects-20-drop-in-cocoa-production-in-2023-24-sources<\/a><\/b><\/span>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_toggle title=”Risks” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#000000″ open_icon_color=”#000000″ _builder_version=”4.25.2″ _module_preset=”default” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n
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Therefore, no warranty is provided as to the accuracy, completeness, or timeliness of any information. The information is based on our assessment of the current legal and tax situation. To the extent that tax or legal matters are addressed, the recipient should discuss these with their tax advisor or attorney.
Investments in financial instruments involve both opportunities and risks. HAGIM\u2019s policy on handling conflicts of interest is published online at www.ha-gim.com\/rechtliche-hinweiserechtliche-hinweise.
The information contained herein is intended solely for professional clients or eligible counterparties. This information document is not intended for U.S. citizens or persons permanently residing in the United States, nor may it be distributed in the United States.<\/p>\n