Over the next three months, from June to August 2019, government plans to raise a total of GH₵10.35 billion from the domestic financial market, representing a 14.46 percent reduction from the amount targeted in the past three months of GH₵12.1 billion
Of the total gross amount, GH₵ 9,873.37 million is to rollover maturities and the remaining GH₵ 476.63 million is fresh issuance to meet Government’s budgetary, financing requirements.
Interestingly, in its effort to further extend the maturity profile of the public debt, government will attempt to sell 20 year bonds, the longest tenured securities ever put up for subscription on Ghana’s domestic debt market. So far the longest tenured bonds are for 15 years.
This is contained in government’s issuance calendar for June to August, 2019, released on Thursday by the Ministry of Finance.
This particular issuance calendar notice does not conform to government’s own normal issuance periods, which is usually for each of the four different quarters in the year.
In the original 2019 second quarter issuance calendar, which was expected to elapse in June, government intended to issue GH₵4,050 million in debt securities this month. However, with the revised issuance calendar covering the period from June to August, only GH₵3,400 million is expected to be issued this month. This reduction, which is believed to be the main reason for the unusual calendar period covered this time around, is the result of the reduced need for domestic financing at this time of the year, following the issuance of US$3 billion in Eurobonds in March. This has shifted financing from domestic to foreign sources.
Domestic portfolio investors will have the exclusive chance to invest up to GH₵8, 150 million in the short term debt securities, with tenors of less than two years, which are not open to foreign investors.
This amount comprises debt securities with tenors of 91 days, 182 days and 364 days to be issued during the period, all of which are reserved strictly for domestic investors.
The remaining portion of the securities of GH₵2, 200 million comprises debt securities with tenors from two years up to 20 years, and would be made available to non-resident investors as well, who have tended to dominate subscriptions of such medium and long term issuances to date.
Government intends to raise much higher funds for the market than it planned during the second quarter at GH₵7, 950 million.
The calendar is based on the Net Domestic Financing in the 2019 Budget, the domestic maturities and the Medium Term Debt Management Strategy (MTDS) for 2019-2022.
The Calendar also takes into consideration Government’s liability management programme, market developments (both domestic and international) and the Treasury and Debt Management objective of lengthening the maturity profile of the public debt.
Segments of the debt securities issuance
The largest segment of the debt securities issuance for the period will be in the form of 91-day treasury bills amounting to GH₵ 5,400 million of which GH₵1,500 million will be issued in June, GH₵2,500 in July and GH₵1,400 million in August.
Issuance of 182 day bills will amount to GH₵1, 900 million comprising GH₵1,050 million in June, GH₵550 million in July and GH₵300 million in August.
For 364 day treasury notes, which have replaced the erstwhile one year notes, GH₵250 million will be issued in June, GH₵250 million in May and GH₵250 million in June.
Two year bond issuances, open to foreign investors as well as local investors, will be issued to the tune of GH₵ 300 million each in June and August only.
Three year bond issuances will total GH₵ 300 million in July. The five year bond issuance will take place in July to the tune of GH₵ 250 million. All of these will be opened to foreign as well as domestic investors.
GH₵300 million will be raised through the 10-year bond issuance in June, whereas GH₵300 million will be raised in July through 15-year bond issuance. The 20-year bond issuance will total GH₵450 million in August.
Both the 91 day and 182 day Treasury bill issuances will be done weekly by auction, while the 364 day issuances, also sold by auction will be bi-weekly, also through the primary auction with settlement being the transaction date plus one working day.
Securities from Two Years up to 20-Years will be issued through the book-building method. However, the issuance of the 10-Year, 15-Year and 20-Year bonds are shelf offerings available to be issued over a period of time, consistent with the MTDS.