Ghana to issue fifth Eurobond by October

By | May 31, 2016

Business News of Tuesday, 31 May 2016



Set Terkperz Finance Minister, Seth Terkper

Finance Minister, Seth Terkper has hinted to Citi Business News Ghana will issue its 5th Eurobond by October 2016. Parliament in December, 2015 gave government the green light to go ahead and issue the Eurobond.

Proceeds from the bond will be used to support the country’s growing infrastructural needs, and to repay part of its maturing debts including the country’s first Eurobond which matures next year.

Speaking to Citi Business News at the sidelines of the Graphic Business Breakfast series, the Minister of Finance Seth Terkper said the Eurobond will be issued either in July or October this year.

“You know emerging markets bonds are important and we are watching the developments in the market. We normally do the bond in July or October so you don’t want to announce now. This is because the markets can change at any time, with the US raising the rates that itself overnight can affect the rates you can get on the market. So you consider a lot of factors and so you don’t make categorical statement today and the markets change and somebody comes and says but you said this is what will happen that is why we try to be a bit hesitant in some of the statements regarding the bond.” Mr. Terpker stated.

High interest Some economists have warned Ghana will attract a very high coupon rate if it goes ahead to issue the 5th Eurobond and have advised government to abandon its plans to issue the bond.

According to them, investors will demand high rates due to the country’s upcoming elections, inflationary trends as well as its high debt levels among others. Ghana’s last Eurobond was issued at a coupon rate of 10.75 for 15 years which was described as one of the highest in the region.

Early this year, the Finance Minister led a team of government officials to meet with investors to showcase the country’s growing economic prospects in a non – deal road show.

Seth Terpker tells Citi Business News government needs the cash to retire the country’s first Eurobond which matures in 2017.

‘Ghana is already in the market, the country has the 2017 Eurobond maturing to be refinanced. So we have to think about the way to pay for the debts’. Ghana in 2007 issued its first Eurobond and successfully raised $750 million at a coupon rate 8.50%.

There are currently three more Eurobonds outstanding, with maturity profiles including August 2023, January 2026. As at December 2015 Ghana’s public debt stood at 94.5 billion cedis.