Instruction No. 011-09-2015 on Treasury Bond and Obligation Auction Procedures with UMOA-Titres Support

Governor of the Central Bank of West African States (BCEAO), Having regard to Regulation No. 06/2013/CM/UEMOA of June 28, 2013 on Treasury bonds and obligations issued by auction or syndication with the assistance of UMOA-Titres Agency, particularly Articles 4, 7, 8, 18 and 21, Having regard to Decision No. CM/UMOA/006/05/2012 of May 10, 2012 by the Council of Ministers authorizing BCEAO to create a Regional Agency for Support in the Issuance and Management of Public Debt Securities by UMOA Member States, named "UMOA-Titres Agency", Having regard to Decision No. 98-03-2013 of March 15, 2013 by the BCEAO Governor establishing UMOA-Titres Agency, Having regard to Decision No. 397/12/2010 of December 6, 2010 by the BCEAO Monetary Policy Committee establishing rules, instruments and procedures for implementing BCEAO's monetary and credit policy, Having regard to Decision No. 24/2013/CPM/BCEAO of December 9, 2013 amending and supplementing Decision No. 397/12/2010 of December 6, 2010 by the BCEAO Monetary Policy Committee establishing rules, instruments and procedures for implementing BCEAO's monetary and credit policy, Having regard to Governor's Instruction No. 02-09-2013 of September 9, 2013 on general rules applicable to Treasury Securities Specialists (SVT) in UEMOA Member States, particularly Article 5, Having regard to the Participation Agreement for the Automated Securities and Liquidity Management System of the West African Monetary Union (SAGETIL-UMOA), Avenue Abdoulaye FADIGA BP 3108 – Dakar – Senegal Tel. (221) 33 839 05 00 / Fax. (221) 33 823 93 35 www.bceao.int INSTRUCTION NO. 011 – 09 - 2015 ON AUCTION PROCEDURES FOR TREASURY BONDS AND OBLIGATIONS WITH THE ASSISTANCE OF UMOA-TITRES AGENCY IN UEMOA MEMBER STATES The Governor

DECIDES PRELIMINARY TITLE: GENERAL PROVISIONS Article 1: Definitions For the purposes of this Instruction, the following terms shall mean:

1. AUT or Agency: UMOA-Titres Agency;
2. BCEAO: Central Bank of West African States;
3. CREPMF: Regional Council for Public Savings and Financial Markets;
4. Credit Institution: Bank or financial institution with a banking character under the Law on Banking Regulation;
5. ISIN: International Securities Identification Number;
6. Regulation: Regulation No. 06/2013/CM/UEMOA of June 28, 2013 on Treasury bonds and obligations issued by auction or syndication with the assistance of UMOA-Titres Agency;
7. SGI: Management and Intermediation Company;
8. SAGETIL-UMOA: Automated Securities and Liquidity Management System of the West African Monetary Union;
9. Bidder or Subscriber: any investor, natural or legal person, who submits one or more bids on its own behalf or for a third party, with a view to acquiring Treasury bonds or obligations put up for auction;
10. SVT: Treasury Securities Specialist;
11. UEMOA: West African Economic and Monetary Union;
12. UMOA: West African Monetary Union.

Article 2: Object This Instruction aims to specify the organizational arrangements for auction sales of Treasury bonds and obligations with the assistance of UMOA-Titres Agency.

Article 3: Participants in the auction procedure for Treasury bonds and obligations The participants in the auction procedure for Treasury bonds and obligations are the Central Bank of West African States, the Regional Council for Public Savings and Financial Markets, the public treasuries of UMOA Member states, AUT, credit institutions, Management and Intermediation Companies, and regional financial bodies.

TITLE I: CONDITIONS AND PROCEDURES FOR ORGANIZING AUCTIONS Article 4: Issuance request and authorization of securities Treasury bond and obligation issuances by UEMOA Member States are carried out according to an annual schedule, established and updated quarterly by AUT. The annual issuance schedule is published on the Agency's website and BCEAO's website. AUT may organize issuances not included in the annual schedule, under conditions defined by its Board of Directors. At least ten working days before the auction date, the issuing public treasury submits a request to AUT for organizing an auction of Treasury bonds or obligations, using the application form in the annex.

Article 5: Creation and authorization of the auction Within forty-eight hours of receiving the request, AUT provides the ISIN code for the issuance to the public treasury of the issuing State, which creates the securities with all their characteristics in the SAGETIL-UMOA application. AUT verifies the created securities' characteristics and authorizes them in SAGETIL-UMOA. At least five working days before the auction date, AUT creates the auction for the sale of issued securities, authorizes and activates it in SAGETIL-UMOA.

Article 6: Information of participants AUT disseminates to subscribers, on behalf of BCEAO, the call for bids notice for the auction, in accordance with Article 6 of the Regulation. AUT's activation of the auction, as referred to in Article 5 above, serves as notification to primary subscribers connected to SAGETIL-UMOA. AUT also communicates this call for bids notice to CREPMF, on behalf of the public treasury. For Treasury obligations specifically, the call for bids notice may serve as the information note required from issuers prior to issuance.

Article 7: Publication of the call for bids AUT, on behalf of BCEAO, widely disseminates the call for bids notice regarding the auction, notably through the press, according to modalities defined by its Board of Directors. Publication costs are borne by the issuing State. The notice is also published on AUT's and BCEAO's websites. AUT transmits the call for bids notice to the Regional Securities Market (BRVM) for publication in its official quotation bulletin. AUT may carry out a broader publication of the call for bids notice, at the cost and upon request of the issuing State.

Article 8: Submissions by participants On the date set for the auction, under conditions defined in the call for bids notice, AUT proceeds to open the auction in SAGETIL-UMOA. On the same day, no later than the time fixed in the call for bids notice, participants send their bids to SAGETIL-UMOA, in accordance with the procedure provided for this purpose. Under Article 4 of the Regulation, a single investor may not bid for more than 60% of the announced auction amount, on its own behalf or for a third party.

Article 9: Bid evaluation At the fixed deadline for bid submissions, the auction is automatically closed by SAGETIL-UMOA. Upon closing, AUT determines the provisional auction results using SAGETIL-UMOA, based on automatically anonymized bids. It establishes an anonymous evaluation grid cumulatively counting, by interest rate for bonds or by price for obligations, the number of bids, the number of securities, and the subscribed amounts. These anonymous bids are ranked in ascending order of interest rate for Treasury bonds and descending order of price for Treasury obligations.

Article 10: Determination of results AUT transmits, via SAGETIL-UMOA, the anonymous evaluation grid to the public treasury of the issuing State, accompanied by proposed amounts to be retained for the auction. No later than one hour after auction closing, the public treasury makes the final decision on the retained amount for the auction within SAGETIL-UMOA. Connected primary subscribers may consult the auction results in the application. AUT may organize non-competitive bids for Treasury Securities Specialists (SVT).

Article 11: Preparation of the auction minutes The auction minutes are automatically generated by SAGETIL-UMOA upon validation in the application by the public treasury of the issuing State. Validation of auction results serves as signature of the minutes. The minutes notably include the overall bid results, including non-competitive bids from SVT where applicable, as well as information on subscription and absorption rates for bonds and obligations. These details are completed, for bonds, by the weighted average interest rate of bids, and for obligations, by the weighted average price of offers. Subscription rate, absorption rate, weighted average interest rate, and weighted average price are calculated according to modalities defined in Annex 2.

Article 12: Communication of results Auction results, including the list of total retained bids and those retained by country, are automatically generated by SAGETIL-UMOA. At the expense of the issuing State's public treasury, AUT publishes bid results in the form of a press release drafted by it and accompanied by the minutes, notably through the press in UEMOA Member States. Results are also published on AUT's and BCEAO's websites. They may be communicated by AUT to any interested structure or entity. The aforementioned steps regarding result communication are completed no later than the day following the auction. The issuing State's public treasury, with UMOA-Titres Agency support, communicates more widely on auction results.

Article 13: Settlement of retained bids Settlement of retained bids is automatically carried out using SAGETIL-UMOA, on the value date indicated in the call for bids notice, by debiting the bidder's current or settlement account. Direct subscribers without a current or settlement account at BCEAO may make payment through their designated settlement agent, in accordance with the SAGETIL-UMOA Participation Agreement. Treasury bond settlement covers the nominal amount, net of prepaid interest calculated on a 360-day year basis. Treasury obligation settlement covers the amount of the retained subscription. Payments made by bidders are credited to the issuing State's public treasury on the auction value date. Subscribers take all necessary measures to ensure sufficient account funding to settle securities allocated to them for their own account or on behalf of their clients.

Article 14: Default by bidders Any bidder for bonds or obligations lacking sufficient provision on the auction value date to cover its retained bids is sanctioned in accordance with Article 21 of the Regulation. To this end, any payment incident must be promptly brought to AUT's attention by BCEAO.

Article 15: Settlement and delivery of Treasury bonds and obligations on the secondary market BCEAO ensures clearing of operations between participants holding a securities account and a current or settlement account in its books. Settlement and delivery of securities are automatically carried out in SAGETIL-UMOA.

TITLE II: OUTCOME OF OPERATIONS Article 16: Repayment at maturity On the first working day following maturity, repayment is automatically carried out through SAGETIL-UMOA.

Article 17: Payment incidents In case of insufficient provision, holders of bonds or obligations due at maturity are repaid within available resources and pro rata to the number of securities held. The balance is repaid in priority when provision is established, taking into account late interest calculated at the higher rate between the issuance rate and the marginal lending facility rate plus five percentage points. For subscriber information, incidents regarding Treasury bond and obligation repayment are promptly brought to AUT's attention by BCEAO via telex, any electronic transmission offering sufficient reliability, or any other rapid communication channel.

TITLE III: FINAL PROVISIONS Article 18: Automated procedures The automated procedures implemented for the issuance and circulation of Treasury bonds and obligations issued by auction are detailed in SAGETIL-UMOA application's procedure manual.

Article 19: Entry into force This Instruction and its annexes, which form an integral part thereof, repeal and replace all prior provisions dealing with the same subject matter. It enters into force on the date of its signature and will be published wherever necessary. Done in Dakar, on [Date] Tiémoko Meyliet KONE

LIST OF ANNEXES ANNEX 1: Request for organization of Treasury bond or obligation issuance ANNEX 2: Calculation formulas for statistics to appear in the auction minutes ANNEX 3: Request for organization of Treasury bond or obligation repurchase

Annex 1 Header of the Issuing Public Treasury REQUEST FOR ORGANIZATION OF TREASURY BOND OR OBLIGATION ISSUANCE Treasury Bonds / Treasury Obligations TO THE ATTENTION OF THE DIRECTOR OF UMOA-TITRES AGENCY In accordance with the issuance schedule of (1) ......., we would appreciate your taking the necessary measures to organize the auction for (2)... Treasury [bonds/obligations], according to the following terms: Offer characteristics: Issuer: …....................... Guarantor (if applicable): …....................... Name of issuance(3): .......................... Maximum global amount: …....................... Million FCFA Unit nominal value: …....................... Million FCFA Maturity date: …....................... Value date: …....................... Auction date: …....................... This operation is divided into .. issuances(4) as follows: 1st tranche: Maximum amount …............ Million FCFA : Interest rate(5) …............. : Price(6) …............. 2nd tranche: Maximum amount …............ Million FCFA : Interest rate(5) …............. : Price(6) …............. PLEASE FIND ATTACHED:

1. THE MINISTER'S DECISION AUTHORIZING SAID ISSUANCE
2. THE INFORMATION NOTE REGARDING THE ISSUANCE At…………..…….on……………….… The Director Copy to: Mr. the National Director of BCEAO (1) Indicate year. (2) Indicate Treasury bonds, Treasury obligations, etc. (3) In case of title substitution/consolidation. (4) If applicable, insert characteristics of additional issuances. (5) For obligations, indicate the fixed interest rate selected. For bonds, indicate "multiple". (6) For obligations only - indicate "multiple".

Annex 2 Calculation formulas for statistics to appear in the auction minutes Treasury Bonds Subscription Rate = Amount of subscription proposals / Amount put up for auction Absorption Rate = Amount of retained subscriptions / Amount of subscription proposals where Ti is the interest rate of bid i; Oi is the number of bonds subscribed at rate Ti; O is the total number of bonds subscribed; and n is the total number of retained bids. Weighted Average Yield Rate = (M/m − 1) × (360/d) where: M is the nominal amount of the bond; m is the retained amount, net of prepaid interest (acquisition price); and d is the actual duration of bonds in number of days.

Treasury Obligations Subscription Rate = Amount of subscription proposals / Amount put up for auction Absorption Rate = Amount of retained subscriptions / Amount of subscription proposals Weighted Average Price of Offers = Σ(i=1 to n) (Pi × Oi) / O where: Pi is the price of bid i; Oi is the number of obligations subscribed at price Pi; O is the total number of obligations subscribed; and n is the total number of retained bids. Weighted Average Interest Rate of Offers = Σ(i=1 to n) (Ti × Oi) / O where: T is the nominal interest rate, expressed as a percentage; PMP is the weighted average price of offers, expressed as a percentage of nominal price; and N is the duration of obligations in number of years. Weighted Average Yield Rate = T/PMP − (PMP − 100%) / N

Annex 3 Header of the Issuing Public Treasury REQUEST FOR ORGANIZATION OF TREASURY BOND OR OBLIGATION REPURCHASE Treasury Bonds / Treasury Obligations TO THE ATTENTION OF THE DIRECTOR OF UMOA-TITRES AGENCY We would appreciate your taking the necessary measures to organize the repurchase of (1) ….... Treasury [bonds/obligations], according to the following terms: Securities characteristics: Name of operation:…............................ Name of securities: …........................... Interest rate(2) :…............................ Issuance date (value):................................ Maturity date:................................. Nominal amount in circulation:…............................ Million FCFA Unit nominal value:…............................ FCFA Offer characteristics: Interest rate(3):…............................ Price(4):............................... Nominal amount to repurchase: …........................... Auction date:…............................ Value date:…............................ This operation is divided into .. tranches(5) as follows: 1st tranche: Maximum amount …............ Million FCFA : Interest rate(3) …............ : Price(4) …............. 2nd tranche: Maximum amount …............ Million FCFA : Interest rate(3) …........... : Price(4) …........... PLEASE FIND ATTACHED:

1. THE MINISTER'S DECISION AUTHORIZING SAID REPURCHASE
2. INFORMATION NOTE REGARDING THE REPURCHASE At…………..…….on……………….… The Director Copy to: Mr. the National Director of BCEAO (1) Indicate Treasury bonds, Treasury obligations, etc. (2) For obligations only. (3) For obligations, indicate the fixed interest rate selected. For bonds, indicate "multiple". (4) For obligations only, indicate "multiple". (5) If applicable, insert characteristics of additional repurchases.