Thursday, May 19, 2022
24 °c
Accra
25 ° Mon
24 ° Tue
24 ° Wed
24 ° Thu
  • Login
Ghana News Flash
  • Home
  • News
  • Politics
  • Entertainment
  • Business
  • Sports
  • Lifestyle and Health
No Result
View All Result
  • Home
  • News
  • Politics
  • Entertainment
  • Business
  • Sports
  • Lifestyle and Health
No Result
View All Result
Ghana News Flash
No Result
View All Result
Home Business

Ghana’s $3bn Eurobond Oversubscribed – DailyGuide Network

ghananewsflash.com by ghananewsflash.com
April 4, 2021
in Business
0
NPP, NDC Clash Over Economy
0
SHARES
4
VIEWS
Share on FacebookShare on Twitter


Ken Ofori-Atta

GOVERNMENT MADE a successful debut into the international debt capital markets securing $3 billion from an oversubscribed bond book value of $6 billion.

Ghana thus becomes the first sub-Saharan African Sovereign to issue a Eurobond in US Dollars since the onset of the COVID-19 pandemic.

The proceeds will support the budget deficit by funding growth-oriented expenditures and conduct liability management on both external and domestic bonds.

Government explained in the 2021 budget its intention of raising up to $5 billion through Eurobond, Diaspora bond, Sustainable bond and Syndicated loans.

This 2021 Eurobond is therefore one of the four vehicles government intends to use to raise the amount.

With this Eurobond issuance, government has the chance of either going back to the market to raise additional Eurobond or explore the three other options, in case it intends to secure more funds from the International Debt Capital Markets.

Taking into consideration the fact that Ghana successfully raised $2 billion in 2018, $3 billion in 2019 and $3 billion in 2020, the 2021 bond issuance comes after a series of fixed-income virtual meetings held locally across three days with investors from the United States, United Kingdom, Europe, Middle East and Asia.

The transaction comprised four tranches – $525 million 4-Year Zero Coupon, $1 billion 7-year weighted average life (WAL) priced at 7.75%, $1 billion 12-year WAL at 8.625% and $500 million 20-year WAL with a coupon of 8.875%.

Renewed Confidence

The successful issuance of the 2021 Eurobond is testament to investors renewed confidence in the Ghanaian economy and its managers.

Despite the looming risk of a possible third wave of COVID-19 infections across Europe, generally more volatile market conditions and global trade disruption from the Suez Canal, Ghana has seen strong demand for its sovereign bond offering which was oversubscribed at over $6 billion.

Ghana’s consistent ability to raise multi-billion-dollar financing and pioneering use of a 4-year zero tranche are a testament to Ghana’s hard-won credibility with investors, strong growth prospects and disciplined fiscal consolidation efforts in 2020.

The Zero Coupon Bond

Ghana is the first Emerging Market Sovereign to add a zero-coupon bullet tranche to its bond financing mix, enabling it to create fiscal space to build back better. Ghana’s debut 4-year zero coupon bond was oversubscribed by two times, despite being the first of its kind to be issued by a West African sovereign, further demonstrating investors continued support for Ghana’s transformation story and strong fiscal consolidation efforts.

Nature Of The Bonds

Zero coupon bonds are bonds issued without any interest but trade at discount. Thus, unlike other coupon bearing bonds, Ghana will not pay any interest on the 4-year zero coupon.

The only debt obligation that the government will have to honour will be the face value of $525 million on maturity.

According to government, the 4-year zero coupon bond is an innovative market-oriented solution to address post COVID-19 challenges and improve the cash flow required for debt servicing. Part of the proceeds shall be used to refinance more expensive domestic debt (the average interest rate of circa 19%).

How It Works

Assuming Ghana issues a $500 million zero coupon bond at a discounted rate of 20% ($100 million) Ghana will receive $400 million in cash today but pay back $500 million when the bond matures in 4 years.

In the interim, however, Ghana will not pay any interest over the four years. This means government can use the money it would have used to pay interest over the next 4 years for something else.

Government has indicated the intention of using the proceeds to refinance more expensive domestic debt attracting 19% interest. So Ghana is borrowing at no interest and using the proceeds to pay existing debt with higher/expensive interest rates.

How Does This Benefit Ghana?

Ghana’s existing domestic bonds attract an average interest rate of about 19% (make it 20% for ease of analysis). So here, Ghana issues a 20% discounted zero coupon bond at $500 million and receives $400 million. If the $400 million is converted to Cedis at say a cedi-dollar exchange rate of 6, that is some GH¢2.4 billion.

This can be used to retire domestic bonds attracting interest of 20%. This will save Ghana GH¢480 million in interest savings a year (that is 20% multiplied by GH¢2.4 billion).

 

 

 



Source link

ghananewsflash.com

ghananewsflash.com

Related Posts

Rand Merchant Bank (RMB)
Business

Rand Merchant Bank (RMB)

February 17, 2022
Producer Price Inflation rises to 15.6% in January
Business

Producer Price Inflation rises to 15.6% in January

February 17, 2022
‘Minister Directed GCB/Customs Reconciliation Audit’
Business

Standard Bank Warns Govt – DailyGuide Network

February 17, 2022
Next Post
Elmina Sharks beats Ebusua Dwarfs in Cape Coast

Elmina Sharks beats Ebusua Dwarfs in Cape Coast

Inter Allies adopt Dawu Park as home grounds for GPL second round – Ghana Sports Online

Inter Allies adopt Dawu Park as home grounds for GPL second round – Ghana Sports Online

Tweeps Hail Shatta Wale’ After Massive Crowd Turn-out in US Concert

Tweeps Hail Shatta Wale’ After Massive Crowd Turn-out in US Concert

Follow Us

  • 52.2M Fans
  • 110 Followers
  • 48.1k Followers
  • 166k Subscribers

Spotify Promotes Ghanaian Artistes – DailyGuide Network

‘Tsunami’ rocks Upper West NPP Constituency Elections – The Chronicle News Online

Achimota Forest not sold -Jinapor – The Chronicle News Online

PSG gives HUGE hint about Kylian Mbappe’s departure to Real Madrid — Ghana Sports Online

ASR Africa, Rebecca Foundation Agree to Build More Libraries

Chelsea sale still awaiting approval

Recommended

Top Model Aisha Med Welcomes Beautiful Baby Girl

Top Model Aisha Med Welcomes Beautiful Baby Girl

9 months ago
Olympics snatch Allies’ skipper – Ghanaian Times

Olympics snatch Allies’ skipper – Ghanaian Times

2 years ago
Youth In Tourism Festival 2022 Launched

Youth In Tourism Festival 2022 Launched

6 months ago
Guinness Ghana Announces Ghc 10m Covid-19 Support For Customers

Guinness Ghana Announces Ghc 10m Covid-19 Support For Customers

2 years ago

Instagram

No Result
View All Result

Trending

Spotify Promotes Ghanaian Artistes – DailyGuide Network
Entertainment

Spotify Promotes Ghanaian Artistes – DailyGuide Network

by ghananewsflash.com
May 19, 2022
0

Spotify’s Sub-Saharan Africa Head of Music, Phiona Okumu, says they are committed to giving Ghanaian artistes...

‘Tsunami’ rocks Upper West NPP Constituency Elections – The Chronicle News Online

‘Tsunami’ rocks Upper West NPP Constituency Elections – The Chronicle News Online

May 19, 2022
Achimota Forest not sold -Jinapor – The Chronicle News Online

Achimota Forest not sold -Jinapor – The Chronicle News Online

May 19, 2022
PSG gives HUGE hint about Kylian Mbappe’s departure to Real Madrid — Ghana Sports Online

PSG gives HUGE hint about Kylian Mbappe’s departure to Real Madrid — Ghana Sports Online

May 19, 2022
ASR Africa, Rebecca Foundation Agree to Build More Libraries

ASR Africa, Rebecca Foundation Agree to Build More Libraries

May 19, 2022

Ghana News Flash

GhanaNewsFlash is Ghana’s top news and entertainment website. GhanaNewsFlash gives you the latest local, national and international news, the hottest entertainment happenings, the must-know lifestyle stories and the biggest sport updates seven days a week. We love Ghana and thrive on telling the stories our readers are most passionate about – be it the latest crime news, the juiciest celebrity read or the fun story you needed to get through your day at work. If you’ve got a story or opinion we need to hear, get in touch through our Contact Us page.

Recent News

  • Spotify Promotes Ghanaian Artistes – DailyGuide Network May 19, 2022
  • ‘Tsunami’ rocks Upper West NPP Constituency Elections – The Chronicle News Online May 19, 2022
  • Achimota Forest not sold -Jinapor – The Chronicle News Online May 19, 2022
  • PSG gives HUGE hint about Kylian Mbappe’s departure to Real Madrid — Ghana Sports Online May 19, 2022
  • ASR Africa, Rebecca Foundation Agree to Build More Libraries May 19, 2022
  • Chelsea sale still awaiting approval May 19, 2022

Categories

  • Business
  • Entertainment
  • Lifestyle and Health
  • News
  • Politics
  • Sports

Important Links

  • Home
  • Contact Us
  • About Us
  • TERMS AND CONDITIONS
  • PRIVACY POLICY

© Copyright 2020 GhanaNewsflash.com a BLACK OPAL COMPANY

No Result
View All Result
  • Home
  • Politics
  • News
  • Entertainment
  • Business
  • Sports
  • Lifestyle and Health

© Copyright 2020 GhanaNewsflash.com a BLACK OPAL COMPANY

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In