Ghana ends road show for US$1.5 billion Eurobond

•   Mr.  Terkper

• Mr. Terkper

Ghana yesterday ended its Eurobond road show to engage institutional investors outside the country to raise 1.5 billion dollars.

A statement issued by the Ministry of Finance yesterday said the government delegation led by the Minister of Finance Mr. Seth Terkper and the Governor of the Bank of Ghana Dr. Henry Kofi Wampah met investors in London, San Francisco, Los Angeles, Boston and New York.

The statement said investors were updated of Ghana’s significant progress towards fiscal consolidation and the continued support provided by the International Monetary Fund (IMF), the World Bank Group and other development partners.

“The Government of Ghana thanks its current and prospective international investors for the series of meetings from September 22 to September 30, 2015.

It said the government continued to consider a USD bond issue, subject to market conditions, as stated in the original announcement.

The proceeds from the Eurobond are expected to be used in financing projects outlined in the 2015 budget and pay off maturing debts.

It would be recalled that Parliament in July, approved a request by the government to raise 1.5 billion dollars from the European Bond Market to manage Ghana’s liabilities and to support the 2015 budget.

One billion dollars out of the facility is expected to be utilised in financing the 2015 budget to reduce the reliance on short-term expensive domestic debts, and the other 500 million dollars would go into re-financing domestic and external debts.

Finance Minister, Mr. Seth Terpker, in making the request for the approval for the financing plan, told the House that the move would enable the country to finance its liabilities promptly at the lowest possible cost with marginal risk.

He said the impact of the sovereign bond issue, which would diversify the country’s funding sources, would be “relatively neutral” to the overall debt stock, as it would mostly replace debt already included in the public debt stock.

The minister told the lawmakers that though part of the bond would go into financing capital expenditures this year, the structure of the facility differed from previous eurobonds.

He explained that the bond would be backed by the World Bank Policy Based Guarantee that would enable it (bond) to be issued with a higher rating than the current sovereign guarantee, in order to reduce interest rate.

The bond issue will also be backed by a sinking fund from the portion of the excess of the Stabilisation Fund earmarked for debt amortisation.

The amortisation and the sinking fund plan, which is backed by the Petroleum Revenue management Act, will smoothen the redemption obligations between 2023 and 2026.

By Times Reporter

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