GoG to issue GHc500m 3-yr fixed rate bond

The Government of Ghana (GoG) will issue a GHc500 million three-year fixed rate bond Thursday, January 7, 2016.

In accordance with the Issuance Calendar for the Government of Ghana Securities for January to June 2016, the Bank of Ghana has invited bids for the issue of the bond on behalf of the Government of Ghana through the auction process.

The instrument will be Ghana cedi-denominated and will be issued at par. It shall bear a coupon rate equal to the highest competitive bid accepted at the auction for the security. The coupon rate so fixed shall carry throughout the term of the security.

The bond will be used by the Government of Ghana to restructure its debt and for maturity settlement.

The Bank of Ghana said each Bond shall have a face value of one Ghana cedi with a minimum bid of GHc50,000 and multiples of GHS1,000 thereafter.

The coupon will be determined at the auction to be held on January 7, 2016. Interest payment will be done semi-annually from the issue date, in July and January.

The amount of interest paid on every coupon payment date shall be equal to the principal amount at the coupon rate for half-year.

All payments in respect of the Bonds by or on behalf of the Issuer shall be subject to withholding or deduction for, or on account of taxes, save that, in relation to nonresident Bondholders, the Issuer agrees to pay such additional amounts, as may be necessary in order that the net amounts received by such non-resident Bondholders after the withholding or deduction shall equal the respective amounts, which would have been receivable in respect of the Bonds, in the absence of the withholding or deduction, the Central Bank said.

It added that, for the avoidance of doubt, “this tax gross-up provision shall be for the benefit of non-resident Bondholders only”.

Bids may be made on either a competitive or noncompetitive basis through Primary Dealers only.

Primary Dealers may also submit bids on their own behalf. Bids received will not be revocable.

The 3-year Fixed Rate Bond shall be available to both resident and non-resident investors. Bids must be electronically delivered to the Central Securities Depository Auction Module not later than 1.30 p.m. on Thursday, January 7, 2016.

The Bank of Ghana said it reserves the right to reject any or part of any competitive or non-competitive bid. “Subject to this, competitive bids will be ranked in ascending order of the annual rate of interest bid. Securities will be sold to applicants whose competitive bids are at or below the highest rate at which the Bank of Ghana decides that any competitive bid would be accepted (the "uniform allocation rate").”

The Bank said applicants whose competitive bids are accepted would purchase securities at par with the coupon fixed at the uniform allocation rate.

Competitive bids, which are accepted, and, which are made at rates below the uniform allocation rate will be satisfied in full, the Bank added.

It said competitive bids, which are accepted, and, which are made at the uniform allocation rate, may be satisfied in part only. Non-competitive bids will be accepted at the uniform allocation rate. Settlement shall take place on January 11, 2016. The Register will be maintained on a book-entry system on the Central Securities Depository and, therefore, no certificates will be issued.

The security shall be listed on the Ghana Stock Exchange (GSE) for secondary market trading both on the floor of the Exchange or over the counter (OTC). Trading in the securities is subject to the listing rules of the GSE for Government Securities. The Bond shall be redeemed by the issuer on the maturity date, which shall be January 7, 2019. Such redemption shall be at par, the BoG added.