Business News Fri, 11 May 2018

Historic Eurobond show: Ofori-Atta smells $750m to support budget

The government has indicated, $750 million raised from the international capital markets, would be used to finance the 2018 budget.

According to Finance Minister, Ken Ofori Atta, the government plans to direct the funds to areas such as Irrigation infrastructure, Rehabilitation of Warehouses and Silos, Fisheries and Aquaculture inputs, Education, Road, and Rail infrastructure

This comes on the back of the historic issuance of $2 billion sovereign bonds in the US Thursday. The 10-year bond raised $1 billion at an interest rate of 7.627% while the maiden 30-year bond raised another $1 billion at 8.627%.

These cheaper bonds are expected to help the country pay off the expensive bonds issued by the previous administration and save Ghana money which can be invested in job dense initiatives.

“I think it’s the best 10-year-rates in our history…we also got the highest interest [in the bonds] we have ever got in our history,” Mr Ofori Atta stated on Joy FM’s Super Morning Show, Friday.

The last 5-year bond issued by the erstwhile National Democratic Congress (NDC) administration cost Ghana a coupon rate of 9.25%.

The government intends to use $820 million to swap the 2022 bonds while $400m is to be spent on liability management, he explained.

Sounding excited about the feat chalked up, the Finance Minister told Show host Daniel Dadzie: “It’s quite a testament to what Ghana has done…and I think the market is feeling that Ghana is on the right course.”

Confidently dismissing the claim that the government is on a borrowing spree, Mr. Ofori Atta hinted of a renewed energy by the government to mobilise domestic taxes to pay off old debt.

“For the past eight years the increment on our borrowings have been 26.% year on year [but] last year we decelerated a little bit and came down to 16%...so [debt management] is an area that the Ministry of Finance is cautiously walking,” he explained.

Since 2007 Ghana has issued five Eurobond on the International Capital Market.

The maiden 10-year bond which was issued in October 2007 was paid off on October 4, 2017. This has reduced the number of outstanding Eurobonds to four.

Source: Myjoyonline.com
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