Government will tomorrow Thursday, October 19th, 2017 begin a road show for the energy sector bond, which will be used to clear the energy sector debt..
The show will commence in London on Thursday and there will be another in Accra on the 23rd of October, 2017.
The 2.5 billion dollar bond which will be auctioned in tranches will start with a first tranche of 6 billion cedis, which translates to about 1.3 billion dollars.
A statement stated “Notice to Qualified Investors in Ghana in Relation to the Offer and Listing of Bonds of Up to GHS 6 Billion Senior Unsecured Notes Backed by Irrevocable Assignment of EDRL Receipts under a GHS 10 Billion Bond Issuance Programme to Refinance Legacy Energy Sector Debts”.
Bond to be issued in tranches
The decision to avoid a wholesale issuing of the estimated 10 billion cedis or 2.5 billion dollar bond, according to Deputy Energy Minister in charge of Finance, Joseph Cudjoe is to attract the most competitive price as possible.
“We are looking at raising 6 to 7 billion cedis at this stage because sometimes when it comes to raising funds, strategically if you go in with the huge amounts, investors can bargain for a higher yield. But if you control it and make it smaller, then many investors that show interest can accept very competitive rates.”
IMF & Ghana deliberate on mode of issuance
The IMF has impressed on the government the need to issue the bond as a Sovereign one by which it will be deemed as an amount borrowed by the government of Ghana.
This is in contrast with plans by the government to issue the bond on the books of State Owned Power companies with strong financial statements.
Even though discussions have commenced on these positions, a Deputy Information Minister, Kojo Oppong Nkrumah explains that the deliberations may not be ending at least until the end of this week.
“These meetings will be ongoing till about the 15th of October so it is not a matter that we will expect to finish off with soon…the only conversation that has come up is a question of how we will treat the bond once issued; we have a view and there are other persons who have other views. We have started a conversation on how it ought to be treated on the fiscal tables and we hope that we will all be able to come to a common page by the time the entire set of meetings are done,” he stated.
Mangers and arrangers for bond selected
Standard Chartered Bank Ghana Limited and Fidelity Bank Ghana limited have been appointed as arrangers for the bond while are Temple Investments and GCB Bank will manage the bond.
”E.S.L.A. Plc (unrated) an independent special purpose company established and sponsored by the Republic of Ghana acting through the Ministry of Finance (rated B3, Stable (Moody’s) / B-, Positive (S&P) / B, Stable (Fitch)), has appointed Standard Chartered Bank, Standard Chartered Bank Ghana Limited and Fidelity Bank Ghana limited to arrange a series of fixed-income investor meetings in London and Accra, commencing on October 19th 2017. Co-Managers on the mandate are Temple Investments and GCB Bank”.
Banks unhappy with bond delay
Earlier some commercial banks had pleaded with government to speed up processes to settle the energy sector debt.
Speaking to Citi Business News, the Executive Director at Unibank, Clifford Mettle said government must be swift with the settling of the debt.
“It is one of the things that we were expecting from government because it is actually a promise that it will work at it. The liquidity situations in most banks are a bit critical. This will certainly help to ease the liquidity so banks are actually looking forward to the settlement,” he stated.
He adds that “I think government has a way of structuring some of these bonds and sometimes it can take a bit of time because as a government too they have to be mindful of the fact that it is not something they have to rush through to have a negative repercussion on the country so they consider all these things before they come out with what they have realized as a bond for the various banks”.
Although Mr. Mettle admits that banks are in need of the money, he believes that the interest of the country must come first in handling the issue.
“Yes it is critical for the banks to get these things but we also have to take the interest of the nation at heart” he explained.
Below is full press statement
17 October, 2017
Notice to Qualified Investors in Ghana in Relation to the Offer and Listing of Bonds of Up to GHS 6 Billion Senior Unsecured Notes Backed by Irrevocable Assignment of EDRL Receipts under a GHS 10 Billion Bond Issuance Programme to Refinance Legacy Energy Sector Debts.
E.S.L.A. Plc (unrated) an independent special purpose company established and sponsored by the Republic of Ghana acting through the Ministry of Finance (rated B3, Stable (Moody’s) / B-, Positive (S&P) / B, Stable (Fitch)), has appointed Standard Chartered Bank, Standard Chartered Bank Ghana Limited and Fidelity Bank Ghana limited to arrange a series of fixed-income investor meetings in London and Accra, commencing on October 19th 2017. Co-Managers on the mandate are Temple Investments and GCB Bank.
New 7 year and 10 year benchmark-sized, nominal fixed-rate GHS-denominated bonds, with payments in GHS, documented under Ghana SEC regulations to be listed and traded on the Ghana Fixed Income Market of the Ghana Stock Exchange will follow, subject to market conditions.
The Representatives for E.S.L.A. Plc will be:
- Samuel Arkhurst – Non Executive Director and Chief Economics Officer and Director of Debt Management Division, Ministry of Finance
- Amanor Dodoo – Senior Partner with KPMG (KPMG in Ghana has been appointed as the Administrator of E.S.L.A. Plc)
Representatives for the Republic of Ghana will be:
- Charles Adu Boahen – Hon. Deputy Minister for Finance, Ministry of Finance
- Joseph Cudjoe – Hon. Deputy Minister for Energy, Ministry of Energy
- Cynthia Arthur – Head, Financing & Investor Relations, Debt Management Division Ministry of Finance
- Kwame Adu Okyere-Mensuo- Head Energy Risk Management, Debt Management Division, Ministry of Finance
- Charles Owusu- Technical Advisor- Energy, Oil & Gas, Ministry of Finance
The Roadshow Schedule will be as Follows:
- Thursday, October 19th: London
- Monday, October 23rd: Accra
- Offer Opens: Week starting October 23rd
Please visit www.eslaplc.com for more details.