Afia Nyarko Asare
Government of Ghana has issued US$3 billion Eurobond from a three-pronged bond deal to the Bank of Ghana (BoG) last Tuesday.
This will provide an improved cover for the BoG’s foreign reserves which as at November 2019, was in excess of US$5 billion. The government in February this year made its eighth appearance on the Eurobond market where it raised a total of US$3 billion in different bonds at various maturities.
The longest dated bond was forty-one years together with a seven year and fourteen year dated bonds. The arrival of the proceeds of the bond comes at a time the cedi has appreciated by more than four percent against the US dollar.
The government accepted US$1.25 billion for the 7-year-bond at a coupon rate of 6.375 percent. This compares favorably 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 bond’s will also enable the BoG meet increased market demand for dollars if need be. However, the BoG last week accepted forty million dollars’ worth of bids in its latest auction of forex, which is the same as the amount it accepted three weeks ago, on January 28, 2020.
The forward auction sales started in October 2019. Under the move, foreign exchange dealers are able to make advance purchases of foreign currency to be supplied at an agreed rate later on. The Bank of Ghana adopted this to help in regulating the supply of foreign currency and to stabilize.
Afia Nyarko Asare