Ghana Back in for Another Eurobond

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Ghana is seeking to raise up to $2.5 billion in another Eurobond and Sovereign bond sale after lawmakers approved a request in the late hours of Friday night, before the House went on recess.

 

Documents made available by Parliament show that $1 billion would be used to finance the 2018 budget and $1.50 billion to refinance maturing external bonds – the 2022 and 2023 Eurobonds.

 

About GH¢500 million ($111 million) from the Global Depository Note issue will also go to refinance high-priced domestic credit dominated debt. 

 

The government plans to issue the bonds at least before the close of April 2018 in time take advantage of current favourable market conditions. 

 

The government, in its 2018 budget indicated its intention to raise up to $1 billion from the international capital market to finance capital expenditure.

The budget also stated that government will further access the international market for liability management operations such as buybacks and bond refinancing to re-profile external debt and reduce associated refinance risks.

 

Beginning 2007, Ghana has issued 5 Eurobonds on the international capital market.

The maiden 10-year bond which was issued in October 2007, was paid off on October 4, 2017,  reducing the number of outstanding bonds to four.

At the end of December 2017, the outstanding balance of the four Eurobonds stood at $3.6 million, compared to the $3.7 million in December 2016, representing a difference of $70 million. This represents the amount that was brought back on the 15-year 2030 Eurobond.

The country also intends to issue the 2018 Sovereign Bonds and Global Depository Note to enable it to support the 2018 budget and to refinance the profile of some of the existing stock, according to government information.

Before approving the latest Eurobond, the Finance Committee of Parliament held the view that government intends to take advantage of the current low yields averaging 16.5 percent to refinance expensive bonds used between 2015 and 2017 at an average yield of 24 percent. 

 

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