Ghana is likely to pay high yields on its 700 million dollar Eurobond to be issued this year because of the country’s high debt levels.
This is according to economist and senior lecturer at the University of Ghana, Dr Ebo Turckson.
Ghana is to commence a road show for its fifth Eurobond in the coming days to raise some 700 million dollars for infrastructure development.
Government is reported to be targeting below 10 percent at a maturity period of 15 years, slightly lower than the last figure of 10.75 percent after an initial target of 8.5 percent.
The Bank of Ghana’s recent summary of economic and financial data showed that Ghana’s total debt stock as at December 2015 stood at 97.2 billion cedis representing over 70% of Gross Domestic Product (GDP).
Speaking to an accra based radio station economist and senior lecturer at the University of Ghana Dr Ebo Turckson said the country’s high debts levels are likely to give a yield of 11 percent.
“The yield normally depends on so many factors and I keep on saying the more we keep on piling up our debts the more those who lend to us will also see us as risky borrowers and therefore will want to inch up the interest rate a little bit.
So with a current debt being about 76 percent of our GDP and we looking at going for more loans is going to increase our debt to GDP levels…definitely we will pay are higher interest rate it cannot be lower than that.” the Economist stated.
“…The last time that we sold, interest rate from the US was almost zero percent but now it has inched up a little bit and we would have to compete with assets sold in the US which is slightly higher than the last time we sold which is not good, … I don’t think it will go beyond 12 percent but I suspect it will be around 11 percent.” Dr. Ebo Turckson added.
Source: citifmonline