Ghana has finally succeeded in issuing its fourth Eurobond.
[contextly_sidebar id=”DGBTLQedK5nrpozV3nfE0cmQYaJex8VY”]However it had to cut back on its initial figure to get a better rate for the bond
Government initially announced it would issue a 1.5 billion dollar Eurobond but ended up taking 1 billion dollars after getting 2 billion dollars from investors.
It got a yield of 10 .7 percent as against the 11.5 percent investors demanded the week before.
However at 10.75 percent, the yield on the bonds is still much higher than government’s initial target of 8.5 percent and also higher than the previous one which had coupon rates of 8 and 8.5 percent for its two billion dollar- bond issued.
The World Bank’s guarantee of 400 million dollars on the bond as well as plans by government to set up an infrastructure fund to use proceeds from the country’s Eurobonds played a key role in Ghana getting that yield that is 10.75 percent.
However other countries including Poland and companies from Russia and Turkey who issued bonds this week received much lower yields between less than 1 and 6 percent.
Poland raised $1.97 billion of six-year notes at 0.94 percent.
Russia’s Norilsk Nickel paid 6.625 percent to raise $1 billion in a seven-year note, compared with a yield of 5.60 percent on its October 2020 bond.
Bloomberg reports that Turkcell Iletisim Hizmetleri AS is offering a 10-year bond at 5.95 percent and it is expected to price today, according to the person familiar with the deal.
The average yield on emerging-market sovereign bonds has dropped 50 basis points from this year’s peak on Sept. 29 to 4.76 percent on Tuesday, according to Bloomberg USD Emerging Market Sovereign Bond indexes.
The resurgence in issues this week follows a 34 percent slide in the third quarter to $62.4 billion as China’s surprise devaluation of the yuan in August roiled global markets, spurring demand for haven assets.
Investment banker and CEO of Hydefield Capital Limited, Mahama Iddrisu explained to Citi Business News how Ghana got a lower yield than the 11. 5 percent initially demanded by investors.
‘What happened is they are looking at the importance of the World Bank guarantee of 400 million dollars and that shows that least they have more than half of the interest on the bond of 1.5 and they are also looking at the infrastructure fund that government promised to set to be able to take care of the interest rate overflow. So these two will help them pay the interest’. He said.
According to Finance Minister Seth Tekper, the World Bank partial guarantee of four hundred million dollars, enabled Ghana to borrow on reasonable terms, in a rather difficult market.
The Governor of the Bank of Ghana, Dr. Henry Wampah at the end of the pricing in New York expressed his satisfaction with the bond issue and the processes that led to its success.
Seth Tekper also adds that Ghana has now become the first sub-Saharan African country, outside South Africa, to issue a fifteen-year bond.
The bond is a soft amortizing one with tenure of fifteen years, to be paid off in 2028 and 2029.
About $334 million out of the total will be paid later in 2030.
The proceeds would be used for the refinancing of maturing domestic debt.
By: Vivian Kai Lokko/citifmonline.com/Ghana