Gov’t to issue 5yr domestic bond today

Government is expected to issue yet another five year domestic bond today, July 25, 2016. It is unclear how much the government intends to raise this time round. But proceeds of the bond are expected to be used to refinance debts and maturity settlement.
A statement by the Bank of Ghana indicated that the bids were opened and closed last Tuesday and Thursday, respectively.

The statement further noted that the instrument is to be issued at par, bearing a coupon rate equal to the highest competitive bid accepted at the auction, and shall carry throughout the term of the security.
The bond, which has a minimum bid of 50,000 cedis and multiples of 1,000 cedis thereafter, shall have a face value of one cedi and shall be governed by the laws of Ghana. Meanwhile all successful bids will clear at a single clearing level Pro rata allocation.

It will be opened to both resident and non-resident investors in Ghana and will be listed on the Ghana Stock Exchange (GSE). The book runners will be Barclays, Strategic African Securities and Stanbic bank. Government accepted a little over 800 million cedis worth of bids for a five-year domestic bond last month.
At the time, government agreed to pay a yield of 24.5 percent, slightly lower than the yield at the previous issue. Meanwhile total medium and short term domestic issues for the third quarter is estimated at 17 billion cedis.

Government to support 2016 budget through cheaper funding Finance Minister, Mr. Seth Terkper had earlier stated that government will use cheaper sources of funding to support the 2016 budget and restructure the country’s heavy public debt. In March this year, government paid a yield of 24.75 percent on a similar transaction in March. Of the total amount of issue for the third quarter, government intends to use 14.91 billion cedis to roll over maturing debt.

There are also plans to issue a fifth Eurobond of up to $750 million in coming weeks.