Gov’t re-opens 7-Yr T-Bond issuance

Government has reopened the seven-year treasury bonds offer, which was originally issued in the second quarter of 2018, with maturity due in April 2025.

An outstanding amount of about GHc 754.89 million in bonds is expected to be raised from this particular long-term bond issuance.

In August, government noted that it would continue to build benchmark securities through tap-ins, rather than focusing entirely on new issuances.

The initial issuance of these particular bonds was done at a time that foreign investors, who tend to subscribe to most of Ghana’s medium to long term domestic debt issuances, were reticent over fears of potential currency translation losses due to cedi depreciation and the lure of rising interest rates in the western hemisphere.

Since then monetary tightening in the United States in particular has been stopped due to worries of slowing economic growth and the cedi has more or less stabilized over the past seven months due to record high gross international reserve levels.

Consequently government is hoping for a more enthusiastic response to this week’s tap-in offer than happened during the original issuance last year.

As stated in the Ministry of Finance’s Issuance Calendar for the three months September to November 2019, government plans to issue debt securities worth a gross amount of GHc 14,337.87 million from the domestic market.

Of this amount, GHc 13,645.56 million is to rollover maturities and the remaining GHc 692.31 million is fresh issuance to meet Government’s financing requirements.

The bonds being issued each have a face value of GHc 1, with a minimum subscription of GHc 50,000 and multiples of GHc 1,000 thereafter. The offer is open to both local and foreign investors.

All successful bids will clear at a single level discretionary allocation at the single clearing level in the event of over-subscription.

The seven-year bond would be issued through Barclays Bank, Databank, Stanbic Bank, Fidelity Bank and IC Securities acting as book runners for government.

Medium-Term Debt Management Strategy

The 2019 debt strategy, is basically a continuation of the strategy implemented in 2018, and government is obligated to issue an annual borrowing and recovery plan for 2019 in line with section 60 (5) of the Public Financial Management (PFM) Law.