Posted: Monday 2nd June 2014 at 13:13 pm

Gov’t Names 3rd Eurobond Advisors

Seth Terkper, Finance Minister



Seth Terkper, Finance Minister
Transaction advisers for the country’s third Eurobond issue have been named, a statement from the Finance Ministry has confirmed.

It said Barclays Bank, Deutche Bank and Standard Charted Bank would act as lead managers for the transaction while Databank, EDC stock brokers and Strategic African Securities operate as the local partners in the transaction.

Ghana expects to raise about $1 billion from the flotation of bonds on the international market.

Government last year managed to raise a similar amount on the international market at a yield of about 7 percent.

However, analysts have expressed fears that Ghana might pay a higher rate if the $1 billion, which is expected to begin six weeks from now, is raised.

The yield on the current second Eurobond is pegged at around 9 percent.

Meanwhile, some three bonds that were sold by Government on Thursday to finance some maturing debts are said to have been heavily oversubscribed.

The sale came at a high cost, as Government would be paying investors who purchased in the activity an interest of 24.5 percent.

The bond issue, which was open to offshore investors, will be the third this year.

A similar issue in April attracted a yield of 25.48 percent, the highest in three years.

Government sought to raise GH¢300 million through the bond auction, but it realised GH¢626 million worth of bids from investors.

Under the circumstances, it accepted GH¢372 million and returned the rest to the buyers.

Commercial banks are thus tied as they cannot lend money below 24 percent over a three-year period.

Analysts have attributed the high cost of borrowing by government to the rising inflation rate and the depreciating cedi.

Government paid about 18 percent on a similar paper issued in November last year while also it paid almost 26 percent on a three-year bond issued earlier this year.

Analyst say investors have been asking for higher interest mainly because of the rising deficit and weakening Ghana cedi.

By Samuel Boadi
 
 
 

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