West African bourse chief sees OTC bonds by year-end

West Africa's regional BRVM stock exchange is looking to introduce over-the-counter (OTC) trading of bonds by the end of the year as part of efforts to boost liquidity, its managing director said on May 17.
Jean-Paul Gilet told Reuters the Abidjan-based exchange had weathered Ivory Coast's five-month political crisis and was now looking at other moves to stimulate business, including cutting red tape for new equity listings.
The BRVM suspended business in mid-February after its office was invaded by soldiers, temporarily relocating activities to the Malian capital Bamako.
Speaking a day after the bourse restarted full operations in Abidjan, Gilet acknowledged the BRVM's 610 billion CFA ($1.3 billion) bond market experienced weak volumes and said a Nigerian-style OTC market could help trade.
"You notice that the bond market is very illiquid and that deals are sometimes block trades between buyer and seller," Gilet said in an interview. "We need to develop, and that is what we will do with the backing of the central bank, a market that will let professional players trade between themselves without necessarily going via the stock market - but with certain provisos and in a transparent and open way," he said.
Gilet said the project had been for launch in the first half of this year but had been delayed by a post-election power struggle that cost thousands of lives and sent the economy of the world's top cocoa grower juddering to a halt.
"With all those events we are three or four months behind plan. I hope it will be before the end of the year," he said. Some 23 issuers, ranging from Senegal's Port of Dakar (PAD), Bank of Africa and telecom groups in Burkina Faso and Togo have listed a total 33 bonds on the BRVM.
Yet transactions on May 17 totalled just 540,000 CFA - a mere 823 euros - according to the bourse website. Analysts attribute the low liquidity to the cost and difficulty of doing business. Equity volumes on the bourse also fell during the crisis, which eased last month with the arrest of former president Laurent Gbagbo after he refused to accept defeat in a November 28 election. May 17 turnover was just under 286 million CFA.
"We are working on how we encourage other businesses to come to the market, not just the big ones but also smaller ones - and for the smaller ones via more supple mechanisms," Gilet said. He gave no timeframe for moves in that area.