ESLA issues highest-yielding Cedi bond

ESLA Plc has issued its highest-yielding cedi denominated bond yet, with maturity in December, 2031, and a pricing range of 20.50 percent to 21.00 percent.

Investors, last week over-subscribed the re-opening of the issuance of ESLA Plc’s 12-year cedi-denominated bond, which was originally issued on January 13, 2020. However the pricing reflects the tightening of financing conditions in the wake of the coronavirus outbreak – the record high yields for the latest issuance are coming barely a fortnight after the Bank of Ghana slashed its benchmark Monetary Policy Rate by 150 basis points to 14.5 percent, a move supposed to commensurately lower coupon rates on debt securities.

This constitutes Tranche E4-B under the GHS 10 billion bond programme.

Bids submitted amounted to GHc 1,199,538,146.00 within the pricing range of 20.50 percent to 23.50 percent. Of this, GHc 1,199,052,646.00 was accepted within the pricing range of 20.50 percent to 21.00 percent.

The bonds will mature on December 29, 2031.

Initially, the target size of Tranche E4B was GHc 600 million and the minimum and maximum sizes the Issuer intended to accept were GHc 300 million and GHc 1,867,234,000 respectively.

“Proceeds from this issuance will be used to settle portions of the outstanding legacy debt and other obligations due suppliers and other creditors within the energy sector,” the Issuer explained in a statement.

This brings the total issuance under the GHc 10 Billion bond programme to GHS 8.294 billion. The total outstanding amount on ESLA Plc bonds is GHc 7.629 billion comprising GHS2.260 billion, GHS 2.740 billion, GHS 1 billion and GHS 1.629 billion for the 2024, 2027, 2029 and 2031 bond maturities respectively.

Of the outstanding bonds, GHc 664 million was redeemed in a buyback transaction financed with funds from the Lock Box account. This is made up of portions of the 2024 and 2027 bonds.

At the initial issuance of Tranche E4, ESLC Plc indicated that, the bond issuance had been necessitated due to the enhancement of inflows into the ESLA, as a result of the increments in the energy debt recovery levy by government announced during the 2019 mid-year budget review.

E.S.L.A. Plc is expected to continue to undertake periodic buyback and cancellation of outstanding bonds using proceeds in the Lock Box Account via open market operations.

The Bonds are backed by the Energy Debt Recovery (EDR) Levy imposed under the Energy Sector Levy Act.

The Tranche E4-B Bond issuance has been listed on the Ghana Fixed Income Market (GFIM).