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Eurobond Market Overwhelmingly Endorses Ghana as the Country Successfully Nears Completion of the IMF Programme

Eurobond Market Overwhelmingly Endorses Ghana as the Country Successfully Nears Completion of the IMF Programme

Ghana successfully raised US$3 billion in Eurobonds yesterday. The country’s strong macroeconomic  performance over  the  past  two  years  and  bright  future  prospects  were confirmed  by  the  Capital  Markets  with  an unprecedented  order-book  in  excess  of  US$21 billion; an oversubscription of more than seven (7) times the largest ever in Africa to-date.

The bonds were issued in three tranches with the following terms: 

  • an amount of US$750 million for a 7-year bond issued at 7.875%; 
  • an amount of US$1,250 million for a 12-year bond issued at 8.125%; and 
  • an amount of US$1,000 million for a 31-year bond issued at 8.950%.

The interest rates compare very favourably to the interest rates obtained in the 2018 Eurobond issue, when taking into account the 70 bps increase in the Federal Funds Rate from 1.700% to 2.400% over the period. As an example, we issued the 31-year yesterday at 8.950% compared to the 30-year which was issued at 8.627% last year, which is only 0.323% higher despite the 0.700% increase in the Fed Rate over the same period.

The  results  provide  compelling  evidence  of  the  progress  made  under  the  Akufo-Addo government and demonstrate strong interest in the Ghanaian economy from the international investor base.  During the process, bids submitted exceeded US$21 billion – compared to over US$8 billion in bids recorded in 2018. At US$21 billion, this is the highest ever order- book for bonds issued in Sub-Saharan Africa.  

This landmark issuance recognises the credibility of the Economic Management Team, which has led Ghana to the successful completion of the IMF ECF Programme that derailed under the erstwhile NDC Government. It also confirms the confidence of the international investor community in the strength of Ghana’s economic outlook. The competitively priced 31-year bond  has  the  longest-ever  tenor  for  bonds  issued  by  an  African  Sovereign,  exemplifying investors’ confidence in Ghana’s long-term prospects.

The Ministry of Finance, on behalf of the Government of Ghana, undertook a three (3) day intensive roadshow, dubbed “Ghana on the Rise”, to New York (USA), Boston (USA) and London  (UK).  The  team,  led  by  Hon.  Ken  Ofori-  Atta  (Minister  for  Finance),  Dr  Ernest Addison  (Governor,  Bank  of  Ghana),  Hon.  Charles  Adu  Bohen  (Deputy  Minister  for Finance),  Hon.  Amin  Adam  (Deputy  Minister  for  Energy)  and  Dr  Maxwell  Opoku-  Afari (Deputy  Governor,  Bank  of  Ghana),  met  with  over  120  investors  face-to-face  and  via conference calls.

Prior  to  the  roadshow,  the  Ministry  of  Finance  obtained  approvals  from  Cabinet  and Parliament in 2018, as part of the budget approval process, in order to be able to go to  the market quickly in 2019 depending on favourable market conditions. The Ministry appointed international Joint Lead Managers, domestic Co-Managers, and External and Local Counsels to support the Sovereign issuance. The Lead Managers were Bank of America Merrill Lynch, JP Morgan Chase, Morgan Stanley, Standard Bank, and Standard Chartered. The Co-Managers were  Databank,  Ghana  Commercial  Bank,  Fidelity  Bank,  IC  Securities,  and  SAS  Finance Group.

Going forward, Government is committed to continuing to entrench structural irreversibilities to sustain and anchor the macroeconomic gains, including strict enforcement of the Public Financial  Management  Act,  implementation  of  the  Fiscal  Responsibility  Act  and  the establishment  of  the  Fiscal  Responsibility  Council  and  Financial  Stability  Council  to monitor fiscal/debt sustainability and financial stability respectively.

Proceeds from the Eurobond will also help support Bank of Ghana’s reserves. The local currency  has  appreciated  against  the  Dollar  by  more  than  10%  over  the  past  week  and  is currently trading at around GH¢5.43.

This  exceptional  performance  and  strong  appetite  for  Ghana’s  bonds  is  yet  another endorsement of the progress made by the Government of Ghana. The funds will help finance the budget driving Government’s transformative economic agenda to support job creation and prosperity, and help move the country towards a Ghana Beyond Aid.