The government’s plan of borrowing up to US$3 billion from the Eurobond market to support the 2020 budget will commence this week as a delegation led by the Finance Minister, embarks on a series of meetings with investors.
Finance Minister Ken Ofori-Atta who got the approval of Parliament to raise up to US$3billion on the Eurobond market to support the execution of the 2020 budget will be meeting investors from Europe as well as North America.
With the government touting stability and, in some cases, an improvement in key macroeconomic indicators, the delegation will be hoping to sell this success story to the investors in exchange for a favourable coupon rate on the amount on the targetted amount.
The mood in the investor community is one of skepticism with lingering doubts about the government’s ability to remain prudential in the run-up to the December 2020 elections; a scenario that could potentially lead to investors demanding a hefty interest rate to compensate for the inherent risks.
But the recent revision of Ghana’s credit ratings by Moody’s will count as a feather in government’s cap as it bids to further endorse the government’s ability to protect the gains made during the International Monetary Fund’s bailout programme ahead of the 2020 elections.
The ratings agency, Moody’s revised Ghana’s economic outlook ratings from stable to positive while affirming country’s long-term issuer and senior unsecured bond ratings at B3.
Moody’s in a statement explained that its decision to assign a positive outlook stems from its rising confidence that the country’s institutions and policy settings will lead to fiscal stability among others as a result of the reforms implemented under the recent IMF reforms programme.
Bond issuance
The government last year raised a similar US$3 billion dollar-Eurobond with three maturity periods.
The three tranches come at a maturity period of seven years with a 7.875 percent coupon rate, 12 years with 8.125 percent coupon rate, and 31 years with 8.95 percent coupon rate.
The Finance Minister is set to announce the outcome of the 2020 Eurobond roadshow in the first week of February.
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