Ken Ofori-Atta

Gov’t secures US$3 billion Eurobond at cheaper rates

A delegation led by the Finance Minister Ken Ofori-Atta on Tuesday, February 4, 2020, completed the issuance of a US$3 billion Eurobond in three installments with interest rates better than what was realized in similar bonds issued last year.

The three-tranche bond was sold with 7-year, 14-year, and 41-year maturities.

A member of the delegation who spoke to Citi Business News explained that the government accepted US$1.25 billion for the 7-year-bond at a coupon rate of 6.375 percent.

This compares favourably to an exact tenor bond government issued in 2019 with a coupon rate of 7.875 percent.

Also, the government was successful in securing US$1 billion with a maturity period of 14 years at a rate of 7.75 percent. This rate also trumps the 8.125 percent the government accepted for a 12-year bond issued as part of the 2019 Eurobond.

The last of the three bonds issued was a 41-year bond, which happens to be the longest dated bond issued by an African country. The government accepted to borrow US$750 million at a rate of 8.75 percent for the longest dated bond which matures in 2061.

The yield for the longest-maturity instrument dropped from the initial guidance of 9.125% and is the highest-yielding sovereign Eurobond of the year so far.

Prior to the 41-year bond, the longest tenor bond issued by an African country was a 31-year bond with a coupon rate of 8.95 percent also issued by Ghana in 2019.

Although government set out to borrow US$3 billion in its eighth Eurobond appearance, it received offers to the tune US$15 billion – reflecting investors’ appetite for Ghana’s bond

The proceeds from the bond issuance are expected to be used for refinancing of some maturing debts with the rest committed to provided infrastructure.

Citibusiness news