Govt’s $ 2.25bn bonds will not crowd out private sector


One of three book runners for Government of Ghana’s four bonds issued recently, totaling 2.25 billion dollars has downplayed fears that the success of the bonds auction will have a negative impact on credit for the private sector.

Government on Monday (April 3, 2017) announced it was successful in the auction of a total of 2.25 billion dollars in four bonds.

The first two bonds, totaling 1.13 billion dollars was issued at 15 and 7 years period with the same coupon of 19.75%.

In addition, the Ministry of Finance raised the cedi equivalent of USD1.12 billion in 5 and 10 year bonds via a tap-in arrangement.

Despite its success players in the financial sector have cautioned that the move will have an impact on the private sector who will have difficulty in accessing funds.

But the Director and Head of Markets at Barclays Bank Ghana and lead arranger for the bonds sale Kobla Nyaletey tells Citi Business News the fears are unwarranted.

“Those fears cannot happen because the bonds were subscribed to (more than 95%) by non-resident investors. This also means that foreigners brought in dollars from outside the country to buy the bonds therefore this is not about the government taking 2 billion dollars worth of cedis from the Ghanaian market,” he explained.

This issuance represents the largest amount issued by a sub-Saharan African country in a day.

Commenting on the size, Mr. Nyalatey told Citi Business News the transaction is a landmark in terms of its size.

According to him, Ghanaians should rather be excited due to some economic benefits that the transaction provides to the government.

“We should be excited about a 2 billion transaction that enables the government to do whatever that it intends to do. First, it enables the government to escape rollover risk as well as fund more than half of the entire funding needs for this year. The transaction also saves the nation excess reserves above eight billion dollars equivalent to over five months of import cover,” Kobla Nyalatey asserted.

By: Vivian Kai Lokko/citibusinessnews.com/Ghana



Published on 4 April 2017 | 5:57 pm at Source