Global markets oversubscribe Ghana’s $3bn Eurobond sale …makes history as first African country to issue 41-year bond
The transaction comprised US$1.25 billion six-year Weighted Average Life (WAL), US$1 billion 14-year WAL and US$750 million 41-year WAL priced at a coupon rate of 6.375 per cent, 7.875 per cent and 8.750 per cent respectively.
A statement issued by the Ministry of Finance in Accra yesterday said, “Following a three-day roadshow in a series of fixed-income investor meetings in New York, Boston and in London, Ghana issued a second tri-tranche Eurobond transaction under its International Capital Markets Programme.”
The statement said despite concerns over the coronavirus and its potentially adverse impact on market conditions for emerging markets credits in general, a diverse investor base, largely from Europe and US, supported Tuesday’s issuance.
This according to the statement translated into a peak order book, in excess of US$15 billion (five times the amount required).
“Despite 2020 being an election year, the sterling investor confidence in the country has been demonstrated by the competitive rate of 8.75% at which the 41-year WAL tranche, the longest-ever tenor bond issued by an African issuer, was issued compared to a rate of 8.95% 31-year bond issued in 2019,” the statement said.
The statement said proceeds for the bonds would be used to support Ghana’s budget for infrastructure, restructuring of the energy and financial services sectors, and a liability management exercise.
“The capital markets reaffirmed their increasing confidence in the Ghanaian economy when the West African country’s 2020 international bond issuance resulted in an order book five times the amount required on Tuesday, 4 February 2020,” the statement said.
It said, “This bond issuance comes two weeks after international ratings agency Moody’s gave a resounding vote of confidence in the country’s economy with a positive outlook.”
The statement said international investors expressed interest in Ghana’s macroeconomic fundamentals following a stellar economic performance, three years after a 2016 economic decline dented the country’s outlook. Growth rebounded strongly from 3.4 per cent in 2016 to 8.1 per cent in 2017 before moderating to 6.3 per cent in 2018.
It would be recalled that in 2016, Ghana issued a six-year Eurobond at 9.250% compared to Tuesday’s six-year bond at 6.375 per cent – a staggering 288 basis points improvement.
Three years after the country’s current economic managers assumed the helm of affairs, their prudent management of the economy has attracted positive reviews from the international community.
In May 2017, Fitch affirmed the country’s rating at B and revised the outlook to stable, while S&P in October 2018 upgraded the country’s rating from B- to B with a stable outlook. Moody’s in January 2020 revised the country’s outlook from stable to positive.
Growth has averaged 7 per cent from 2017 and inflation, on the other hand, fell from 15.4 per cent in December 2016 to 7.9 per cent (new series) in December 2019, the lowest rate in recent times.
BY TIMES REPORTER
