[ 2016-11-11 ]

Ghana settles on GHC438m in 10 year domestic bond
The Government of Ghana (GoG), thebftonline.com
has learnt, has raised an amount of 438 million
Cedis (110 million) in its ten - year Cedi Bond.
The debut Cedi bond though was highly over
subscribed was at a fixed yeild of 19.0 percent.

Information available to thebftonline.com
indicates that the offer which was also open to
foreign investors, drew bids of 726 million Cedis
which far more than the initial 200 million Cedis
target the government was hoping to raise.

The issuance of this bond was part of
government’s revised calendar for August to
December this year where it intends to raise up to
some GHC25.3 billion.

Of this amount, GHC23.8 billion has been allocated
to be used to settle pending bonds or notes
nearing maturities with the remaining amount of
money being some GHC1.4 billion being fresh
issuance which will be used to meet government’s
financing requirements.

The successful issuance of the bond would go a
long way to boost government’s long term debt
management strategy, which, among other things, is
focusing on minimising and/or replacing expensive
shorter dated instruments with longer dated
issuances.

Prior to the issue, the West African country's
longest local currency debt maturity was seven
years.

And this comes at a time that Ghana, is currently
implementing a three-year economic stabilization
programme deal with the International Monetary
Fund and some believe that the introduction of the
10-year debt is the best way to borrow for the
longer-term and ease interest rates.

Total Public Debt

Ghana’s total public debt now stands at GH¢109
billion as at July 2016, which translates into
about 65.9 percent of GDP, according to data
released by the central bank.

The debt stock, according to the central bank,
grew from GH¢101.1billion in January to about
GH¢108.9 billion as at the end of July this
year.

In terms of the composition of the debt, there was
virtually no increase in the external debt
component, which only rose to GH¢60.7billion from
GH¢60.6billion, and remained at 36.4 as a
percentage of GDP.

But then the government picked up US$750million
Eurobond in September.Total interest payment is
estimated at GH¢10.5billion, equivalent to
6.6percent of GDP and 24.1 percent of total
expenditure. Of this amount, GH¢2.2billion will
be expended on external interest, while GH¢8.2
billion will be for domestic interest payments.

Also the amount to be spent on interest payments
this year dwarfs the GH¢6.7 billion planned for
capital expenditure.

As a percentage of total expenditure, interest
payments will account for about a quarter while
capital expenditure makes up 12.7 percent.

Ghana Raises 2-Year US$94.64m Euro Bond

Government on October 13, 2016 successfully issued
a US Dollar denominated bond on the domestic bond
market. The 2-year bond, which was highly
subscribed, yielded an amount of US$94.64 million
at a coupon rate of 6 percent, consistent with the
initial price range of between 5.5 percent and 6.5
percent.

On settlement, this 2-year bond becomes one of our
country’s lowest yield bonds aside the 2017s
which are currently trading at about 5.45 percent
and maturing in less than a year.

The offer, which was open to resident investors
only, attracted a total of 26 bids with a face
value of US$99.64 million.

- See more at:
http://thebftonline.com/business/economy/21865/ghana-settles-on-ghc438m-in-10-year-domestic-bond-.html#sthash.5dOywjam.dpuf

Source - Business & Financial Times

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