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Ghana Eurobonds to Extend Rally on Oil

Cedis Economy

Tue, 28 Jul 2009 Source: By Garth Theunissen and Laura Cochrane

July 28 (Bloomberg) -- Ghana’s Eurobonds, which surged 93 percent since November, are poised to extend their gains as newly discovered oil deposits and international bailouts accelerate the economic recovery, Barclays Capital said.

Ghana's 8.5 percent dollar-denominated bonds due 2017 are likely to rally further on rising export revenues and a more stable currency, Ridle Markus, an Africa strategist at Barclays-owned Absa Capital in Johannesburg, said in a phone interview today. The bonds rose, lowering the yield to 9.73 percent from 9.83 percent as of 11:42 a.m. in the capital Accra.

“Ghana’s Eurobonds offer very attractive yields for investors looking for exposure to Africa because the economic risk associated with the country has declined markedly,” said Markus. “The country’s fiscal position is going to get a lot more attractive over the next 12 months and we expect to see a lot more demand for Ghanaian assets as a result.”

The West African nation, the world’s second-biggest cocoa producer after the Ivory Coast, plans to boost oil output to 500,000 barrels a day by 2014 as it seeks to become the continent’s newest crude exporter.

The International Monetary Fund said earlier this month that it would lend Ghana $1.02 billion to support the country’s balance of payments, the biggest loan to an African nation since the start of the global financial crisis. On June 30, the board of the World Bank agreed a $535 million loan to finance the budget deficit and tackle poverty.

Gold Miner

Production on the Jubilee oil field may begin in the second half of 2010, according to a July 15 statement by Tullow Oil Plc, which holds a 34.7 percent stake in the field. Ghana expects output from the field to reach 120,000 barrels a day by the third quarter of next year, Markus said, citing discussions with government officials.

The goal may make Ghana, which is also Africa’s second- biggest gold miner, one of the world’s top 50 oil producers, London-based Tullow Oil said in a July 15 statement.

Oil exports may help Ghana’s economy expand 6.1 percent next year and 10.5 percent in 2011, compared with an estimated 4.1 percent growth this year, based on Absa’s forecasts.

Source: By Garth Theunissen and Laura Cochrane