Business News of Thu, 19 Oct 20171

Roadshow for GHC10bn energy bond starts today

Government will today (October 19, 2017) embark on a roadshow for the energy sector bond to be used to clear the energy sector debt.

Today’s roadshow, to be carried out in London, is the first of two roadshows to be conducted ahead of the issuing of the bond.

The bond is also expected to be issued in tranches with the first to raise 6 billion cedis; the equivalent of about 1.3 billion dollars.

The second roadshow is expected to be carried out in Accra on the 23rd of this month.

Earlier, a Deputy Energy Minister in charge of Finance, Joseph Cudjoe told Citi Business News the decision is to attract the competitive price as possible.

“We are looking at raising 6 to 7 billion cedis at this stage because sometimes when it comes to raising funds, strategically if you go in with the huge amounts, investors can bargain for a higher yield. But if you control it and make it smaller, then many investors that show interest can accept very competitive rates.”

Citi Business News also understands that the government and the IMF have been deliberating on whether the bond be issued as a Sovereign one or not.

While government plans to issue the bond on the books of power companies with strong financial statements, the IMF is urging that the bond is issued as a Sovereign one.

By this, it will be considered as an amount borrowed by the government of Ghana which will also be calculated as part of the country’s already ballooning debt.

It is unclear what the outcome of the deliberations with the IMF has been as government is yet to officially make any comment on the issue.

But Economist, Dr. Ebo Turkson has advised that government does not go in for a Sovereign bond issue.

He argues this will impact adversely on the economy.

“These institutions in the energy sector should be made viable to be able to go and borrow on their own of course they can get some government support for their borrowing so I am not in support for Sovereign bonds on behalf of institutions rather than have the institutions go and borrow themselves.”

“If the institutions do not devour and pay the money, then the government will have to pay which then it piles up on our debts … but if the institutions borrow based on their own balance sheet, it makes them more efficient and repay those debts,” he further asserted.

The energy bond when successful, is expected to raise some 10 billion cedis which will be used to clear all outstanding debts in the energy sector.

Majority of the debt include that owed commercial banks who have complained of the impact of the delay in the issuing of the bond, on their operations.

Standard Chartered Bank, Standard Chartered Bank Ghana Limited and Fidelity Bank Ghana limited have been selected as arrangers of a series of fixed-income investor meetings in London and Accra, commencing on October 19th 2017.

Co-Managers on the mandate are Temple Investments and GCB Bank.

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