Government Of Ghana Issues 5-Year Bond

Against the background of strong macroeconomic fundamentals and in furtherance of its efforts to strengthen as well as deepen the domestic capital market, the Government of Ghana is issuing a 5-year Bond. The objective of the issue is to extend the yield curve of Government securities beyond the current 3-year horizon, provided by the Government’s 3-year fixed rate bond.

Under the envisaged issue, a total amount of ¢650 billion will be floated in 5-year bonds. It will have the features of a normal conventional bond with a fixed coupon rate and interest payment on half-yearly basis from the issue date.

The bond will be issued through the auction process at which investors will be requested to quote their desired yields. Interest rates for the bonds will therefore be determined at the auction from the bids submitted by investors.

The security shall be listed on the Ghana Stock Exchange for secondary market trading.

For the first time, participation in the bond is open to both resident and non-resident investors to expand the investor base.

The issue of the 5-year bond before the end of the year means that the market will enter 2007 with benchmark instruments and a yield curve up to 5 years. This will give a big boost to the bond market in Ghana. It will provide the necessary guidance to both public and private corporates, who desire alternative sources of long-term financing to expand productive capacities, to borrow from the market through the issue of bonds. Such issues could be for maturities ofat least up to 5 years or more depending on the nature of the project to be financed. These will be easily priced with reference to the government’s risk free yield curve that will emerge from the various Government instruments that have been issued.