Ghana’s Gross International Reserves (GIR) are expected to receive a major boost as the country awaits the US$ 1billion Eurobond proceeds as well the US$1.2 billion loan syndication from Ghana Cocoa Board (COCOBOD).
The US$2.2 billion will make more forex available to strengthen the local currency, the cedi.
The country’s Gross International Reserves amounted to US$5.2 billion at the end of April 2013, compared to a stock position of US$5.4 billion at the end of December 2012. This is equivalent to 2.9 months of import cover.
Last week, the Minister for Finance and Economic Planning together with the Bank of Ghana Governor, Dr Kofi Wampah, toured some parts of Europe to meet potential investors with regard to Ghana’s second Eurobond issued.
Some officials at the central bank are very optimistic that the Eurobond will be heavily over- subscribed.
The Parliament of Ghana has approved a request by the government to issue its second Eurobond to raise an amount of US$1 billion from the international capital market to finance developmental projects and refinance the first Eurobond issued.
Proceeds from the bonds are expected to be used to finance infrastructure projects and restructure maturing debts and interest payments.
It is also to be used as counterpart fund for capital projects such as the Atuabo Gas Processing project, as well as to finance capital expenditures approved in the 2013 Budget, with priority on self-financing projects such as ports and power projects.
The bonds, which will be issued by the end of next month, have a maturity of 7 to 10 years with Barclays Bank and Citi Group as the Joint Lead Managers.
Cocobod is also expected to sign a syndicated loan in September this year with Rand Merchant Bank and Nedbank, both from South Africa; Bank of Tokyo Mitsubishi UFJ (BTMU); Crédit Agricole; and Société Générale, to raise US$1.2 billion as a pre-export syndicated finance to purchase cocoa in the 2013/14 season.
Three groups of banks are bidding for the deal this year, unlike last year, when only one group of 13 banks approached Cocobod.
Currently, the Board is spearheading a road-show, and this will involve the lead arrangers of the syndicated facility.
Cocobod raises syndicated loans through local and international financers in Europe for cocoa purchases annually.
Industry analysts are anticipating that the loan will be oversubscribed like previously -- which will reflect the confidence of the international financial market in Cocobod’s operations and in Ghana’s potential as a cocoa producer.
Last year, Standard Bank Group -- which assisted Cocobod to secure a facility - asked African banks to be active in trade financing on the continent as international commodity traders are turning to “African banks to finance trade transactions as the global economic slowdown, the euro-zone debt crisis, and tougher capital requirements force international banks to pull back their lending in Africa.”
Ghana operates a two-cycle cocoa year consisting of a 33-week main crop (October-June), which is mainly exported to Europe and Asia, and the minor light crop (11-week), which is discounted to local processing firms including the state-owned Cocoa Processing Company (CPC).
Ghana produced an unprecedented one million tonnes of cocoa during the 2010-11crop-year, thanks to good weather and improved farming techniques, but production declined to about 850,000 tonnes last season. Cocobod said cocoa production tends to fall slightly after a bumper year.
Ghana is the second-biggest producer of cocoa in the world, with an estimated 800,000 people said to benefit directly from cocoa production.
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