Ghana Plans Debut Eurobond Sale of Up to $750m

May 24 (Bloomberg) -- Ghana plans to sell its first Eurobond in July in either London or Luxembourg as it seeks to raise as much as $750 million to fund infrastructure projects, a finance ministry official said.

In July 2005 Ghana, the world's second-largest cocoa producer, was selected as one of 18 countries by the Group of Eight to have its debt to the International Monetary Fund, World Bank and African Development Bank canceled. Power shortages in Ghana's capital Accra is holding back economic growth. Supply is currently rationed with outages in Accra averaging four times a week for as much as 12 hours at a time.

``We've cleared our books significantly,'' said Sam Mensah, a technical adviser on financial markets at the Accra-based finance ministry, in an interview on May 22. ``Ghana has major infrastructure needs which can no longer be put in place by conditional financing.''

The cancelation of much of its debt has made it more attractive to investors, said Mensah. The IMF forgave $383 million owed by Ghana last year and government debt dropped to 42 percent of gross domestic product from 70 percent in 2005, according to data compiled by Fitch Ratings.

Central bank governor, Paul Acquah, estimated on May 21 that economic growth this year would accelerate to 6.5 percent. The Economist Intelligence Unit, a research agency based in London, yesterday cut its forecast for Ghana's annual growth this year to 5.7 percent from 6.2 percent.

Ghana has a high-yield, high-risk credit rating of B+ from Standard & Poor's and Fitch Ratings. Fitch on Feb. 1 raised the outlook for Ghana's long-term foreign-currency debt to ``positive.''

`High Profile'

An Accra-based brokerage, Databank, estimates that power outages cost the country $62 million a month. The power shortages last year affected gold mines owned by AngloGold Ashanti Ltd. and Gold Fields Ltd.

Mensah said the finance minister Kwadwo Baah-Wiredu estimated the bond sale at between $500 million and $750 million. The sale, which has yet to be approved by the Ghanaian parliament, may raise Ghana's profile with investors, Mensah said.

``It gives Ghana a high profile,'' he said. ``We build up long-term interest in our country, in investing in Ghana across the world.''

Ghana also plans to sell more five-year government bonds this year after a debut sale in December, said Mensah, without giving a date for the sale. Ghana began selling three-year debt last month.

Ghana, on the west coast of Africa, is the second-largest gold producer on the continent, after South Africa, and the world's second-biggest cocoa grower, after Ivory Coast.