Gov't to begin Eurobond road show after Sept 18th

Government will begin marketing its fourth Eurobond sale in eight years this month, the Deputy-Minister of Finance Mona Quartey has said.

Ghana plans to start road shows in London and New York ‘around’ the third week of September to raise as much as US$1.5billion.

The Eurobond road show was originally expected to commence this weekend on 12th September; however, it has been pushed back to next week.

“Yes, there will be a road show after the 18th of September,” Mona Quartey told B&FT.

The exercise will be led by Finance Minister Seth Terkper and top officials from both the ministry and central bank, as well as some investment bankers.

The team is expected to engage some banks and institutional investors in London, Germany and the US.

The road show is expected to end with government securing commitment from investors to lend some US$1.5billion to government for financing projects outlined in the 2015 budget, and to pay off debts that are maturing.

Reports reveal that Standard Chartered Bank, Barclays, and Deutshe Bank will act as transaction advisers for the bonds issue.

There are, however, fears that plans by the US government to stop its quantitative easing programme -- a process whereby the US Fed is buying government bonds -- could affect the Eurobond’s fortunes. The Finance Minister however assured that firm measures have been put in place to lessen any negative impact of the US government’s plans on the Eurobond.

Parliament in July approved a request by government to raise an amount of US$1.5billion from the European Bond Market to manage Ghana’s liabilities and to support the 2015 budget.

The bond issue will also be backed by a sinking fund to be funded by a portion of the excess from the Stabilisation Fund earmarked for debt amortisation.

The amortisation and the sinking fund plan, which is backed by the Petroleum Revenue management Act, will smooth the redemption obligations between 2023 and 2026.

There are currently three Eurobonds outstanding, with maturity profiles of October 2017 for the first bond of US$531million; August 2023 for the second bond of US$1billion; and January 2026 for another US$1billion.

The maturity profile of public debt indicates that, currently, 75 percent of domestic debt is short to medium-term, with short-term debt constituting 39 percent of the country’s debt portfolio as at December 2014.

International finance service Moody’s rates Ghana B3, while Standard & Poor’s and Fitch rate Ghana lower at B- and B respectively.