Govt targets GH¢22.73 billion in new debt issuances

From September to November, 2020, government is set to issue cedi-denominated domestic debt securities with a target of GH¢22,727.87 million from the domestic market.

This is according to the public debt issuance calendar for the period September to November 2020 issued by the Finance Ministry.

The securities are to be issued in respect of government’s Public Sector Borrowing Requirements for 2020.

Government is expected to update the issuance calendar on a monthly rolling basis, to reflect a full quarter financing programme. This is due to prevailing extraordinary circumstances brought about by the coronavirus outbreak.

For now, though, of the targeted amount, GH¢19,677.65 million has been earmarked be used to rollover maturing domestic debts, whereas the remaining GH¢3,050.22 million would be fresh issuance, to be used to meet government’s budgetary financing requirements.

Under this new debt issuance calendar, domestic portfolio investors will be able to invest up to GH¢12,700 million in short term government debt securities which are not open to foreign investors. This amount comprises debt securities with tenors of 91 days, 182 days and 364 days to be issued during the period, all of which are reserved strictly for domestic investors.

The remaining portion of the securities amounting to GH¢10,027.87 million, comprising debt securities with tenors from two years up to 20 years, would be made available to non-resident investors as well, who have tended to dominate subscriptions of such medium to long-term issuances to date.

The calendar is based on the Net Domestic Financing provided in the original 2020 Budget, announced in November last year, the domestic debt maturities and the Medium-Term Debt Management Strategy (MTDS) for 2020-2023.

The Calendar also takes into consideration government’s liability management programme, market developments (both domestic and international) and the Treasury and Debt Management objective of lengthening the maturity profile of the public debt.

Per this calendar, government aims to issue weekly the 91-day and 182-day bills, whereas the 364-day bill will be issued bi-weekly, through the primary auction with settlement being the transaction date plus one working day.

Total amounts of GH¢9,200 million, GH¢1,900 and GH¢1,600 million have been planned to be issued for the 91-day, 182-day, and the 364-day bills, respectively.

For securities between two years and 10-years tenors, government will issue them through the book-building method.

Amounts of GH¢2,940 million and GH¢1,500 million respectively have been tentatively planned to be issued for the 2-year notes and 3-year bonds, in addition, government plans to issue an extra U.S denominated 3-year bond of US$2,100 million, along with a targeted amount of GH¢2,200.00 million in 5-year bonds.

A total of GH¢1,000 million has been targeted through the issuance of 7-year bonds.

An amount of GH¢287.87 million worth of 20-year bonds, which are expected to be issued as a shelf offering, will be re-opened based on investors request and dependent on market conditions, the statement said.

Consistent with the MTDS, government may announce tap-ins/reopening of other existing instruments.