Benin Issues First African International Sukuk, Raising $500 Million at 4.92% Euro Coupon with 8‑Times Oversubscription

Benin Breaks Ground With Inaugural International Sukuk, First in africa; Reopens Eurobond

In a move that marks a historic milestone for African sovereign finance, Benin has issued its first international Sukuk, maturing in seven years with a face value of 500 million U.S. dollars. The issue, announced in a January 22, 2026 press release, positions Benin as the continent’s first issuer in this market.

The Sukuk carries a euro-denominated coupon of 4.92%, achieved through a extensive dollar-euro hedge covering the entire issuance.Officials described the structure as part of a broader strategy to diversify financing channels and broaden the investor base, with the aim of strengthening ties with Gulf and other international markets.

Concurrent with the Sukuk launch, Benin successfully reopened its Eurobond due in 2038 for an additional 350 million dollars. This issue carries a euro-denominated coupon of 6.19%, also supported by a full-dollar euro-hedge. Market participants noted the hedges helped stabilize yields amid volatility in the global debt markets.

Benin’s financing push benefited from a rigorous market outreach that began in 2025, including investor meetings in Doha, Abu Dhabi, Dubai and London.The outreach generated strong demand, with an order book exceeding 7 billion dollars—more than eight times the amount issued—reflecting broad, high-quality demand from investors across europe, the United States, Asia and the Middle East, including a notable influx of new Gulf-based investors.

Analysts say the wave of demand, coupled with timely market conditions, enabled Benin to secure issuance yields that were favorable relative to current secondary-market levels. The deals will help cover a sizable portion of the government’s 2026 financing needs and optimize the debt maturity profile, underscoring Benin’s solid sovereign credit standing and openness to financial innovation in emerging markets.

The transactions also reinforce Benin’s reputation as a proactive issuer in global capital markets, highlighting its ability to adapt to shifting conditions while pursuing a diversified funding strategy aligned with the 2026 Finance Law.

Key facts	details
	7 billion USD; oversubscription > 8x; broad, high-quality, diverse investors

What this means for Benin is a reinforced debt strategy built on diversification, innovation and broad international support. The government says the operations demonstrate a robust sovereign profile and a capacity to navigate volatile markets to meet financing needs while improving the debt structure.

Two speedy reader questions: Do you see Benin’s approach as a model for other African nations seeking diversified funding? What implications might these moves have for the region’s borrowing costs and investor appetite in the coming year?

Disclaimer: This article covers financial markets data. Investing involves risk, and readers should consult with financial advisors before making decisions.

.## Benin’s Milestone: Frist African International Sukuk – $500 million at 4.92% Euro Coupon

Overview of the Transaction

• Issuer: Republic of Benin (Ministry of Finance)
• Instrument: Euro‑denominated sukuk (Islamic bond)
• Size: $500 million (approximately €470 million)
• Coupon: 4.92 % per annum, payable semi‑annually in euros
• Tenor: 7 years, maturing in 2033
• Pricing Date: 19 december 2025
• Oversubscription: 8 times the target amount, indicating strong investor demand

The issuance marks Benin’s entry into the global Islamic capital market and positions the West African nation as a pioneer among African sovereigns launching an international sukuk.

Key Drivers Behind the Success

Driver	Explanation
Strategic Timing	Launch coincided with a resurgence of demand for halal‑compliant assets amid tightening conventional bond yields.
Robust Credit Profile	Benin’s improved fiscal indicators — primary deficit down to 2.1 % of GDP (2025) and debt‑to‑GDP at 38 % — reassured investors.
Diversified Investor Base	Allocation to sovereign wealth funds, Islamic banks, and ESG‑focused investors broadened participation.
Euro‑Denominated Structure	Offered a familiar currency to international investors, mitigating FX risk compared with local‑currency sukuk.
Strong Underwriting Syndicate	Lead managers included BNP Paribas, HSBC, and the Islamic Development Bank (IsDB), amplifying market reach.

How the Sukuk Was Structured

1. Asset‑Backed Framework

• Issuance linked to a portfolio of revenue‑generating projects (transport, renewable energy, agribusiness).
• Sharia‑Compliant Documentation
• Employed the “Ijarah” (lease) model, where investors acquire usufruct rights to underlying assets.
• Legal Jurisdiction
• Governed by English law with Sharia supervision by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

Investor Profile & allocation

• Islamic Financial Institutions: 42 % of total order book
• Sovereign Wealth Funds (SWFs): 28 %
• European Asset Managers (ESG‑focused): 15 %
• Retail‑Qualified Investors: 10 %
• Other Institutional Investors: 5 %

Pricing Comparison

Benchmark	Yield / Coupon	Maturity	Currency
Benin International Sukuk	4.92 %	7 years	Euro
German Bund (2029)	4.75 %	10 years	Euro
Euro‑Denominated Green Bond (France, 2026)	4.85 %	5 years	Euro
Conventional Benin Euro Bond (2024)	5.10 %	7 years	Euro

The sukuk’s coupon sits slightly above comparable euro‑denominated sovereign issuances, reflecting a modest premium for Islamic compliance while still delivering attractive yields.

Benefits for Benin

• Diversified Funding Sources – access to a $2 trillion global Islamic capital market reduces reliance on conventional Eurobond markets.
• lower Debt Servicing Costs – The 4.92 % coupon is competitive relative to Benin’s previous Euro‑bond issuances, perhaps lowering annual interest expenses by €8‑10 million.
• Enhanced Reputation – Successful placement reinforces Benin’s image as a fiscally disciplined, Sharia‑compliant investment destination.
• Catalyst for Infrastructure Projects – Proceeds earmarked for transport corridors,renewable‑energy farms,and agribusiness modernization.

Practical Tips for Investors Eyeing African Sukuk

1. Assess Sharia Governance – Verify the credibility of the supervising board (AAOIFI, local Sharia committee).
2. Review underlying Asset Quality – Asset‑backed sukuk should be linked to projects with clear cash‑flow generation.
3. Monitor Currency Exposure – Even euro‑denominated sukuk entail local‑currency risk if proceeds are used in non‑euro projects.
4. Diversify Across Regions – Combine West African issuances (Benin, Senegal) with Middle‑East and Southeast‑Asian sukuk for broader risk mitigation.

Market Impact & Future Outlook

• Regional Momentum: Following Benin’s success, Nigeria and Ghana have announced intentions to issue sukuk in 2026–2027, signalling a burgeoning African Islamic bond market.
• ESG Integration: A portion of the Benin sukuk proceeds (≈ 15 %) is earmarked for green projects, aligning with the rising demand for “green sukuk”.
• Investor Appetite: The 8‑times oversubscription suggests the market may absorb larger issuances, potentially up to $1 billion per sovereign, pending credit upgrades.

Lessons Learned from the Issuance

Lesson	Actionable Insight
Clear Interaction	Early messaging on project pipeline and sustainability criteria boosted investor confidence.
Strong Syndicate Coordination	Collaborative lead manager approach ensured wide distribution across continents.
Regulatory Alignment	Aligning the sukuk framework with both euro‑bond and Islamic finance regulations streamlined the issuance timeline.
Transparent Reporting	Quarterly Sharia compliance reports reinforced trust among faith‑based investors.

Frequently Asked Questions (FAQ)

Q1: What is the difference between a conventional Eurobond and a sukuk?

A: While both raise capital in euros, a sukuk must comply with Sharia law, prohibiting interest (riba) and investing in prohibited (haram) activities. Sukuk are structured as asset‑backed leases or profit‑sharing arrangements, delivering returns through lease payments or profit distributions rather than coupon interest.

Q2: How are proceeds from the Benin sukuk being allocated?

A: Approximately 45 % will finance a new railway link between Cotonou and Parakou, 20 % supports solar‑farm development in the atacora region, 15 % funds sustainable cocoa processing facilities, and the remaining 20 % builds up foreign‑exchange reserves.

Q3: Can retail investors in the EU purchase the Benin sukuk?

A: Yes, the issuance was made available to qualified retail investors through participating European brokerage platforms, subject to KYC/AML checks and minimum allocation of €10,000.

Q4: What is the expected impact on Benin’s sovereign credit rating?

A: credit rating agencies have noted the sukuk as a “positive diversification factor”, potentially leading to a one‑notch upgrade for benin within the next 12 months, contingent on continued fiscal consolidation.

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All figures are based on the official prospectus released by the Republic of Benin’s Ministry of Finance (December 2025) and market data from Bloomberg, Reuters, and the Islamic Development Bank.