Ghana’s 20-year bond: Finance Ministry unhappy with 'unfair' Bloomberg reportage

The Finance Ministry has registered its displeasure with what they describe as negative and sensational slant over a report published by Bloomberg concerning the performance of Ghana’s debut 20-year bond and other related publications, ABC News has gathered.

The Ministry, in a statement on Wednesday, says it has consistently monitored with disappointment how publications about Ghana’s maiden 20-year bond has been unfairly treated by the Financial Media House. The Ministry avers that some reports by a particular Bloomberg reporter are unjustifiably skewed towards a certain direction to cast a slur on the financial performance of Ghana’s economy.

“The Ministry has followed with regrets recent articles published by a particular Bloomberg reporter on Ghana’s economic and financial performance, which seem to always have a negative and sensational slant which does not seem representative of a balanced view. This does not reflect well of an esteemed Financial Media House such as Bloomberg”, parts of the Ministry’s statement read.

The Ministry contends that the publication on the 20-year bond dubbed “In Low-Yield World, 13% can be good enough but 20% insufficient” published on the 25th August 2019 was poorly researched and unfairly analysed. According to the Ministry, the author of the article failed to do a proper comprehensive analysis of the credit ratings and the inflation rates for both countries although the writer sought to do a comparative analysis between Ghana and Rwanda who offered the same 20-year bond but at different coupon rates.

According to the release by the Finance Ministry, “similar to this development, the same writer of the first article on 25th August 2019 posted an article with the title, ‘In Low-Yield World, 13% can be good enough but 20% insufficient.’ It is unfortunate that Bloomberg will publish an article and make reference to two sovereigns with different credit ratings and different levels of inflation knowing very well that two bond issuances in two respective markets should not be compared on a nominal basis, but on a real basis.”

According to the statement signed by the Public Relations Office of the Ministry, when proper comparative analysis which focus on the “real figures” not the “nominal values” is done, it would be realised that Ghana’s bond was relatively better priced than that of Rwanda.

“Rwanda, which has inflation of 1.6% and a credit rating of B+, issued their 20-year bond at 13.25%, implying a real return of 11.65% (i.e 13.25% -1.60%). Ghana on other hand, with an inflation rate of 9.4% and credit rating of B, issued its 20-year bond at 20.2% meaning a real rate of 10.8%.

Thus, Ghana’s real rate of 10.8% was much lower than Rwanda’s at 11.65% despite its higher credit rating. Meaning Ghana was able to obtain financing at a cheaper rate despite their lower credit rating. This also indicates that Ghana’s issuance was much better priced which explains the lower participation”, the Ministry averred.