Business News of Thursday, 12 October 2017
Government has disclosed it is considering to issue its energy bond in batches of two or three.
Citi Business News understands this may be the case as it will attract relatively lower yields and reduce the debt repayment burden.
The decision to avoid a wholesale issuing of the estimated 10 billion cedis or 2.5 billion dollar bond, according to Deputy Energy Minister in charge of Finance, Joseph Cudjoe is to attract the most competitive price as possible.
It is unclear how many batches government is considering for the issuance. But Citi Business News understands there may be at least two.
The first to be issued to raise 6 or 7 billion cedis and the subsequent one to raise the remaining as the case may be.
“We are looking at raising 6 to 7 billion cedis at this stage because sometimes when it comes to raising funds, strategically if you go in with the huge amounts, investors can bargain for a higher yield. But if you control it and make it smaller, then many investors that show interest can accept very competitive rates.”
The IMF has impressed on the government the need to issue the bond as a Sovereign one by which it will be deemed as an amount borrowed by the government of Ghana.
This is in contrast with plans by the government to issue the bond on the books of State-Owned Power companies with strong financial statements.
Even though discussions have commenced on these positions, a Deputy Information Minister, Kojo Oppong Nkrumah explains that the deliberations may not be ending at least until the end of this week.
“These meetings will be ongoing till about the 15th of October so it is not a matter that we will expect to finish off with soon…the only conversation that has come up is a question of how we will treat the bond once issued; we have a view and there are other persons who have other views. We have started a conversation on how it ought to be treated on the fiscal tables and we hope that we will all be able to come to a common page by the time the entire set of meetings are done,” he stated.
Despite the delay in the issuing of the bond, commercial banks on whose books these debts sit have assured of their readiness to meet government halfway in reducing the cost of the debt following appeals by government for them to do so.
Government is seeking to finance the bond with proceeds from the energy sector levy act which is estimated to have accrued a little over 3.29 billion cedis as at the end of 2016.