Massive confidence in Ghana's economy as investors place $15 billion of orders for 40-year Eurobond

Ghana is selling the longest-dated Eurobond ever issued by a sub-Saharan African government as part of a debt issuance to raise $3 billion, international financial news, research and data organisation, Bloomberg has reported.

According to the Bloomberg report which was published on Tuesday, Ghana is selling the longest-dated Eurobond ever issued by a sub-Saharan African government as part of a debt issuance to raise $3 billion.

The government launched the sale of a $750 million tranche, which will amortize and have an average life of 40 years at a yield of 8.875%, according to a person familiar with the matter who asked Bloomberg not to be identified because they’re not authorized to speak about it.

The report further stated that Ghana is also selling $1 billion of 2035 securities at 8% and $1.25 billion of 2027 notes at 6.375%.

Investors have placed around $14 billion of orders, according to a second person, who asked not to be identified.

The yield for the longest-maturity instrument dropped from the initial guidance of 9.125% and is the highest-yielding sovereign Eurobond of the year so far, Bloomberg noted.

The government said in September 2018 that it planned a century bond in dollars. While that didn’t happen, it sold a $1 billion, 2051 instrument with yield of 8.95% six months later.

The yield on that dropped 12 basis points to 8.7% as of 5:41 p.m. in London.

The sale comes at a time when the premium investors demand to hold riskier assets is rising, in large part due to the coronavirus outbreak. Spreads on emerging-market government dollar bonds have widened to 313 basis points over U.S. Treasuries, from 291 basis points at the start of the year, according to a JPMorgan Chase & Co. index.

Bank of America, JPMorgan Chase & Co., Morgan Stanley, Standard Bank Group Ltd. and Standard Chartered Plc are arranging Ghana’s sale.

The latest development is a massive show of confidence in the Ghanaian economy by investors.

This follows a Bloomberg report on Monday which said that the Cedi is the best performing currency in the world against the United States Dollar.

The report said Ghana's currency has strengthened 3.9% in 2020, the most among more than 140 currencies tracked by Bloomberg.