Interest On Yesterday’s Three Year Bond Shoots Up To 23%
The cost of borrowing over a three year period for government through the issuance of bonds has gone up substantially.
The three year bond sold by the Bank of Ghana yesterday saw government pay 23 percent as interest. This is highest interest paid to investors in recent times.
The last time government went onto the bond market to borrow over a similar period, it paid about 19 percent.
However, some analysts say recent developments in the economy and policy rate hike contributed to investors asking for higher interest for their funds.
The development would have serious implications for long term borrowing for private businesses, since the yield on three year bond often serves as the benchmark for borrowing in the country.
This should mean that some banks might not borrow to you below 23 percent over a three year period going forward.
The Bank of Ghana had wanted to raise 402 million Ghana cedis for the three year bond, it however received 465 million cedis worth of bids from investors.