Highly subscribed Ghanaian bond reflects confidence in economy

Economy Ghana File Photo

Tue, 18 Oct 2016 Source: yourbusinesswatch.com

GHANA’s economy witnessed another significant boost with the issuance of a highly subscribed US Dollar denominated bond on the domestic market.

The bond yielded an amount of US$94.64 million at a coupon rate of 6 percent.

The success of the bond which was favourably priced reflects the returning and growing confidence in the Ghanaian economy, according to finance and economic experts.

It is another testimony of the stability imposed on the economy under the guidance of Finance Minister, Seth Terkper following the shocks produced primarily by a four-year energy crisis and poor commodity prices.

According to the Ministry of Finance, the highly subscribed bond confirms Ghana’s bright medium term prospects.

The ministry in a statement explained that at a coupon rate of 6 percent, the 2-year bond had become one of the country’s lowest yield bonds aside the 2017s which are currently trading at about 5.45 percent and would be maturing in less than a year.

The ministry said, the coupon rate of 6 percent, was consistent with the initial price range of between 5.5 percent and 6.5 percent.

“The issuance of the bond gives further impetus to the Government’s Medium Term Debt Management Strategy, which among others focuses on minimising and/or replacing expensive shorter dated instruments with longer dated issuances,” the statement said.

According to the ministry, the proceeds of the bond will form part of the sinking fund to buy back some of the high coupon instruments on the local and international capital markets. Going forward, the ministry indicated that the government would explore the advantages that the instruments type presents as an alternative source of funding, to finance the dollar component of future budgets.

Source: yourbusinesswatch.com