Ghana has priced and will issue its fifth Eurobond of US$750 million at a 9.25% yield. The bond was oversubscribed, with orders exceeding US$4 billion compared to a target issuance size of US$ 750 million. This represents an oversubscription of more than five times indicating the high appetite for Ghana’s credit.
The bond is a back-end amortizing maturity with a weighted average tenor of 5 years. The principal will be expected to be repaid in three installments of US$250 million in September 2020, September 2021 and September 2022. Like the four previous issues, this year’s bond attracted investors from the United Kingdom, Europe, the United States, Middle East and Asia.
The Notes will be listed on the Irish and Ghana Stock Exchanges.
It will be recalled that in August 2016 a road show team led by Hon Seth Terkper, Minister for Finance and Mr. Millison Narh, the Deputy Governor of the Bank of Ghana interacted with investors in London, Boston and New York. Due to unfavourable market conditions, a decision was taken not to price a transaction immediately after the road show and to continue to monitor the markets. The secondary trading level of the Ghana 2023’s at that time was closer to 10.4%. Since then the market has trended favourably, making it attractive for Ghana to price a transaction, with the Ghana 23’s trading at 9.33% prior to announcement this morning.
Earlier, Ghana as part of the new debt management strategy implemented a “buy-back” of US$100 million of the Ghana 2017 Bond using the recently established sinking fund. Hence, the balance on that Bond has been reduced to US$400 million, which will be redeemed from the proceeds of the new issue.
In the broader market context, the transaction is significant because it represents the first sub-Saharan African (excluding South Africa) sovereign issue in 2016 as we approach the final quarter of the year.
Hon Terkper, at the end of the pricing in London, today, expressed his satisfaction with the bond issue and the processes that led to its success, noting that Ghana’s turnaround story had significantly improved investor confidence. This has enabled the country to borrow on more reasonable terms compared to other recent transactions, including the 2015 bond that was issued with a World Bank/IDA guarantee. The transaction is a vindication of the decision taken in August not to issue immediately.
The continuing support of investors in the Ghanaian economy is very much appreciated.