Government has successfully issued its first US dollar denominated bond on the domestic bond market.
The 2-year bond, which was highly subscribed, yielded an amount of $94.64 million at a coupon rate of 6 percent, consistent with the initial price range of between 5.5 percent and 6.5 percent.
The Ministry of Finance, which made this known, said this 2-year bond becomes one of our country’s lowest yield bonds aside the 2017s which are currently trading at about 5.45 percent and maturing in less than a year.”
The offer, which was open to resident investors only, attracted a total of 26 bids with a face value of $99.64 million.
The proceeds of the bond are expected to form part of the Sinking Fund, established by government to repurchase or redeem specified debt to buy back some of the high coupon instruments on the local and international capital market as part of our liability management strategy.
“Going forward, government will explore the advantages that this instrument type presents as an alternative source of funding to finance the dollar component of future budgets.
“The issuance of this bond gives further impetus to government’s Medium Term Debt Management Strategy, which among others, focuses on minimizing and/or replacing expensive shorter dated instruments with longer dated issuances.
It also provides a positive boost to the development of our domestic debt market by introducing a new investment instrument for institutional and individual investors,” the Ministry added.
It indicated that the successful issuance of the bond evidenced by the generally high subscription and the favorable pricing was a reflection of the returning confidence in the Ghanaian economy and further confirmed Ghana’s bright medium term prospects.
For the first half of this year, aggregate borrowing amounted to GH¢30,730.00 million, out of which forecast maturities was GH¢27,779.00 million while net issuance was GH¢2,951.00 million.
For this second half, government plans to issue an amount of GH¢25,270.00 million to rollover forecast maturities of GH¢23,853.56 million with the remaining amount of GH¢1,416.44 million being fresh issuance to meet government’s financing requirements.
Of these, a total of GH¢4,950 million is to be borrowed this month, GH¢4,930 million in November and GH¢4,360 million in December 2016.
A business desk report