Government Gets GH3.4 Billion In Historic 15-Year Bond Issue

Government has raised more than GH3.4 billion in the country‘s first 15-year bond as well as GH1.4 billion in another seven-year government paper that was also closed last Friday.

The State is expected to pay investors who participated in the two bonds an interest of 19.75 percent.

Although government actually had GH3.427 billion worth of bids from investors, it but took GH3.422 billion with proceeds from the seven and 15-year bonds totalling almost GH5 billion.

The monies are expected to hit government account Monday, April 3.

Some of the foreign investors who participated in the bond auction are expected to bring in their dollars Monday, which is expected to go a long way to help stabilise the cedi currently trading at GH4.27 against the U. S dollar.

The finance ministry is hoping to use the funds raised to pay short-dated bonds like the three and five-year bonds that are maturing. This is to enable it to focus on more long-dated bonds.

This is expected to give government a longer time in paying these debts and free the short-term space for private businesses to borrow from banks, a development that could help reduce the cost of short-term credits on the market.

Government has also instituted an arrangement that could see it step in and buy back the bonds, a development that could help in managing the cost of servicing the bond.

According to the second quarter bond calendar, the State is planning to issue another 15-year bond in May this year.

Analysts say issuing more long-dated bonds like this could help raise the required funds for infrastructure projects in the country.

The bond sale was managed by three financial institutions, i.e Barclays, Stanbic Bank and Strategic African Securities SAS.

In a related development, government managed to get more than what it was targeting from another two bonds that were re-issued and closed last Friday. The 10-year bond brought in some GH3.6 billion, however, government just took GH3.5 billion with the five-year bond also receiving GH1.6 billion worth of bids but the State took GH1.1 billion.

The 10-year bond has a yield of 18.75 percent, down from the original interest of 19.75 percent while the 5-year bond would have a yield of 18.75 percent, down from an initial yield of 19.75 percent.

Government on March 31 was able to raise almost GH10 billion from four separate bonds that were issued which were more than 80 percent of the bids that came from foreign investors.

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