Ghana to issue 5-yr bond by August

6/28/2011 6:40:03 PM

The country will issue a GHS300 million 5 year bond early in August. 

It will be the first five-year bond issued by the West African state since 2007. Analysts said it was likely to attract strong interest from dollar-holders -- a factor that could shore up the local cedi currency .

"We believe the time is now right to issue it," said Adams Nyinaku, head of the Bank of Ghana's Treasury, adding the bond would be issued in late July or "early August at the latest".

Ghana became Africa's latest oil producer last year, it is a major gold miner, and the world's largest cocoa grower.

Revenues from its offshore Jubilee field, which began pumping in December, are expected to help propel the country's economy to double-digit growth this year.

"This issue is important in lengthening the government yield curve and provide a pricing yardstick for other term instruments in the Ghanaian market," said Kobla Nyaletey, analyst at Barclay's Ghana.

"Though too early to gauge level of interest, (this bond) is likely to attract good take up and may print around 14-15 percent (yield). This upcoming issue also bodes well for the cedi," he said.

Ghana's cedi rose slightly to 1.5145/85 to the dollar by 1200 GMT from bids of 1.5155 at the open.

"With ultra low inflation figures and expected improvements in fiscal space over the medium term, Ghana's long term debt will remain attractive; but the challenge remains what the proceeds will be used for and concerns over repayment risk," said Sampson Akligoh of Databank Financial Services.

The Bank of Ghana has been contemplating the five-year bond after a string of three-year papers in the past months that were primarily intended to shore up the cedi after it hit all-time lows against the greenback in January.

Alex Tetteh, bond program manager at the Finance Ministry confirmed preparations were set for the five-year issue, but did not say what the proceeds would be used for.

"People are expecting it and it is our view that it will do well," he said.

Ghana's most recent three-year bond, issued in early June, was undersubscribed, softening the local cedi currency against the greenback.

Source: Thomson Reuters 

created by XDC Express