Ghana To Sell Bonds On Stock Exchange

Bourse PixGhana is changing the way it sells bonds, with plans to start issuing debt on the country’s stock exchange, and bringing an end to auctions handled by the central bank.

The country would now use a book-building approach for three, five-and seven-year debt, similar to the method it used for Eurobonds, Michael Cobblah, chairman of the National Bond Market Committee, said in an interview with Bloomberg.

“It will hire banks or brokers to arrange sales,” he said.

“We’ll not go to the auction, it creates business for the market players. Our market is very shallow and you make very little money, it’ll be a good opportunity for the brokers to get more business,” he said.

Ghana is looking to boost volumes on its exchange, where the 35-member composite equities index has gained 6.3 per cent this year.

Debt sales are dominated by the government, with benchmark yields, rising to five-year highs as the cedi heads for a 19th straight annual loss.

“The bonds are already listed on the Ghana Stock Exchange, but there is barely any trading on the exchange,”

Mr.Samir Gadio, Head of African strategy at Standard Chartered Bank Plc in London, in an answer to e-mailed questions said “The push should not be to restrict trading to the exchange, but to boost over-the-counter volumes.”

Countries including Ivory Coast, Cameroon and Burkina Faso use the book-building approach, Mr. Cobblah said.

The Bank of Ghana sells Treasury Bills weekly with maturities of 91 and 182 days, and one and two years. Longer-term bonds are less regular.

The last sale of three-year notes was held on July 31 at an average yield of 25.4 per cent. There have been no offers this year of five or seven-year debt, according to data compiled by Bloomberg.

The plans were announced last week by Finance Minister, Seth Terkper in the 2015 budget without giving more details.

The cedi weakened 0.6 per cent to 3.2101 per dollar at 3:46 p.m. in Accra, taking its loss this year against the dollar to 26 per cent.

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