Gov’t’s 3-year bond oversubscribed, but at huge cost
Government’s three-year bond sold yesterday July 31, 2014 was heavily oversubscribed by investors.
Government wanted to raise about GHâ‚µ400 million, but it got GHâ‚µ644 millions worth of bids from investors .
It however accepted a little over 400 percent.
However it would be paying about 25.4 percent as interest on the funds raised.
This is highest interest paid on such bond issue for a long time.
Government is hoping to use proceeds from the auction to support its finances in the coming months.
About 31 percent of the issue was taken up by foreigners while, local investors took the reminder.
The development might pose a lot of challenge for business that want to borrow commercial banks over a three year period, as it might be difficult to secure credit below an interest rate of 25 percent.
However, Africa President of the Financial Markets Association, Brigid Taylor, told Joy Business there could be a way for businesses who might have to grapple with this challenge.
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