{"id":217222,"date":"2016-05-26T11:19:07","date_gmt":"2016-05-26T11:19:07","guid":{"rendered":"http:\/\/citifmonline.com\/?p=217222"},"modified":"2016-05-26T11:19:07","modified_gmt":"2016-05-26T11:19:07","slug":"govt-cautioned-on-financing-gap-ahead-of-eurobond-issue","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/?p=217222","title":{"rendered":"Govt cautioned on financing gap ahead of Eurobond issue"},"content":{"rendered":"

Government has been cautioned ahead of its move to raise about $750 million Eurobond later this year due to Ghana\u2019s public debt which hit 71.4 percent in December 2015, as well as its inability to secure an external guarantee.<\/p>\n

A latest report released by Bloomberg Intelligence pointed out that government may face tougher times as failure to meet its Eurobond target would leave a $750 million hole in the 2016 budget.<\/p>\n

\u201cIt could be expensive to fill. The Treasury is already paying interest rates close to 25% on bills and bonds in the domestic market. This means that the government would likely need to reduce the budget deficit beyond the targeted net borrowing of 4.8% of GDP this year, if the Eurobond market remains closed for Ghana,\u201d the report warned.<\/p>\n

According to the report, the debt stock and government\u2019s inability to get external guarantee may push investors to go for a higher yield or compel government to cut down on the fund expected.<\/p>\n

More worrying is that, government intends to use $250 million of the bond proceeds to repay some of its debt which must be cleared.<\/p>\n

\"Source:
Source: Bloomberg<\/figcaption><\/figure>\n

Another challenge is government\u2019s plans to cover more than a third of its total borrowing requirement through the Eurobond issue.<\/p>\n

Ghana\u2019s most recent Eurobond offering in October 2015 was issued at a yield of 10.75%, even with a World Bank guarantee for $400 million of the $1 billion issued.<\/p>\n

Government issues domestic bond<\/strong><\/p>\n

Meanwhile, on the domestic front, the Bank of Ghana (BoG) has issued a 500 million Ghana cedi bond today, May 26, 2016 \u00a0to help government raise funds to restructure its debt and maturity settlement.<\/p>\n

A statement copied to Citi Business News indicated that, the move is in accordance with government\u2019s securities for May, 2016;\u00a0 which is at\u00a0 a 3-year\u00a0 fixed rate bond\u00a0 through the auction process.<\/p>\n

According to the statement, the instrument will be issued at par, bearing a coupon rate equal to the highest competitive bid accepted at the auction, and shall carry throughout the term of the security.<\/p>\n

The bond, which has a minimum bid of\u00a0 GH\u00a250,000, and multiples of GH\u00a21,000 thereafter\u00a0 shall have a face value of one Ghana cedi.<\/p>\n

–<\/p>\n

By: Lawrence Segbefia\/citibusinessnews.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"

Government has been cautioned ahead of its move to raise about $750 million Eurobond later this year due to Ghana\u2019s public debt which hit 71.4 percent in December 2015, as well as its inability to secure an external guarantee. A latest report released by Bloomberg Intelligence pointed out that government may face tougher times as […]<\/p>\n","protected":false},"author":14,"featured_media":209313,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"footnotes":""},"categories":[32,171],"tags":[],"class_list":["post-217222","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-local-economy"],"_links":{"self":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/217222","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=217222"}],"version-history":[{"count":0,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/217222\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/media\/209313"}],"wp:attachment":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=217222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=217222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=217222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}