Ghana scraps $1 billion Bank of America loan for bond sale

Ghana dropped a plan to borrow money from Bank of America Corp. to focus on selling $1 billion in Eurobonds as early as June.

The Ministry of Finance withdrew its proposal to get $300 million to $1 billion in loans from Bank of America, James Klutse Avedzi, chairman of the finance committee in parliament, said by phone on Friday. The government has started the paperwork to sell $1 billion of Eurobonds in June, he said.

The International Monetary Fund lent Ghana $918 million to help the West African nation curb its budget gap, support the currency and lower borrowing costs.

The cedi lost 16 percent against the dollar this year, the worst among 24 African currencies tracked by Bloomberg. Economic growth is expected to slow to 3.5 percent in 2015 before rising to 6.4 percent next year, IMF said. Growth in 2015 will be the slowest in 20 years, according to the Finance Ministry.

Yields on Ghana’s 2026 Eurobonds rose a third day, heading for a second straight monthly increase. The yields advanced 11 basis points, or 0.11 percentage point, to 8.87 percent at 3:02 p.m. in London.

Moody’s Investors Service cut Ghana’s credit rating for the second time this year on March 19 to B3, six levels below investment grade, and warned of further downgrades as tumbling oil prices impact the government’s budget. Standard and Poor’s assesses Ghana at an equivalent B-, while Fitch Ratings has it one grade higher, at B.

The fiscal gap was 9.3 percent of gross domestic product in 2014, lower than the 9.5 percent target, the Ministry of Finance said Thursday.

The cedi weakened 0.1 percent to 3.82 per dollar at 1:48 p.m. Ghana will receive the first $114 million from the three-year IMF loan this month, the Washington-based lender said.