Lead managers to be selected for record Eurobond sale

Government has begun the process to mandate lead managers for this year’s Eurobond issuance under the 2021 International Capital Market (ICM) Funding Programme.

The Ministry of Finance in a release revealed that government is in the process of mandating Bank of America, Citi Bank, Rand Merchant Bank, Standard Chartered Bank and Standard Bank as lead managers under the programme.

“One of the key mandates for the banks is to advise the government on various alternative funding structures and options, especially for the Eurobond, that would best fit Ghana’s funding requirements and provide fiscal capacity to further support economic revitalisation and recovery at this time,” the Ministry said.

This year’s ICM programme is targeting up to US$5 billion to support growth-oriented expenditures in the 2021 budget and to conduct liability management of both outstanding Eurobonds and domestic bonds. The programme instruments consist of Eurobonds, Diaspora bonds, sustainable bonds, and syndicated or bridge loans.

The President’s nominee for Minister of Finance, Ken Ofori-Atta, told Parliament last year that of the total US$5 billion to be raised, US$1.5 billion is planned to be used to support the 2021 budget and US$3.5 billion to cater for the government’s debt obligations.

Should the government raise US$5 billion on the international capital market, it would be the largest value of Eurobonds ever issued by the country since its maiden one in 2007.

Market analysts have indicated that to increase investor appetite for the planned issuance, the government must signal a strong intention to revive economic growth and domestic revenue collection, both of which were battered by the COVID-19 shock.

There has been a tightening of spreads for Ghana’s Eurobonds since June last year, with prevailing conditions being favourable as there is an increase in the risk appetite of global bond market investors.

Analysts have also said that conditions can further be improved if the government signals its intention in the 2021 budget to compress the fiscal deficit and reduce the risk to debt sustainability.

Ghana’s total public debt stood at 74.4 percent of GDP in November 2020.