Financial institutions ready to participate in energy sector bond

Business News of Monday, 3 July 2017

Source: citibusinessnews.com

2017-07-03

Govt Money BondThey believe the bond will aid government get the energy sector back on a strong financial footing

Some financial institutions in the country have indicated their readiness to buy into the energy sector bond yet to be issued by government.

This they believe will aid government get the energy sector back on a strong financial footing.

Vice President, Dr Mahamudu Bawumia at the spring meetings in Washington DC in April this year, announced plans to issue a 15-year bond to clear the 2.4 billion dollars debts in the energy sector.

Speaking to Citi Business News on the sidelines of the STANLIB AGM, Managing Director for STANLIB, Emmanuel Alex Yaw Asiedu said the company has confidence in the bond and will most likely buy into it.

“It’s a qualified yes because no matter who the counterparties are we will have to look at the fundamentals before we buy into it but we would want to think that it’s going to be well structured so it’s something that we will very likely buy,” he said.

He stated that the company will examine the bond carefully and participate in it.

Mr Asiedu was optimistic the bond will be successful due to how strategic the energy is to the sustainability of the economy.

STANLIB performance

STANLIB for its Income Trust Fund recorded a 52% increase in its net investment recording GH¢ 4,188,697 in 2016 from GH¢ 1,667,534 in 2015 income.

The company also recorded 151.19% net investment increase in its Cash Trust Fund.

Energy Sector Levies Act

The past NDC government in 2015 passed the Energy Sector Levy Act (ESLA) to among others provide revenue to finance the debts.

Government is said to be raking in an estimated 500 million dollars annually from the ESLA.

In Dr Bawumia’s view, this should lessen the burden in refinancing the 15-year bond aimed at settling the debt in the energy sector.

“This bond which is collateralized against this energy sector levy with 500 million coming in every year would be very easy to finance.”

Debt Restructuring

In August 2016, the erstwhile NDC government through the Finance Minister at the time, Seth Terkper, restructured the debts owed by the VRA.

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