3rd Eurobond Issue Awaits Expert Approval

Seth Terkper, Finance Minister

Seth Terkper, Finance Minister
Ghana's next Eurobond floatation, which is expected to come off soon, is awaiting the approval of transaction advisors, Finance Minister, Seth Terkper, has said.

According to him, the prescription of the experts would determine the exact period for conducting road shows and subsequent floatation of the bond.

Barclays Bank, Deutsche Bank and Standard Chartered Bank have been appointed as lead transaction advisors for the next Eurobond issue, while firms such as Databank, EDC Stockbrokers – a subsidiary of the Ecobank Group and Strategic African Securities (SAS) have been appointed as co-managers for the transaction.

The Finance Minister also said that Dentons and JLD & MB Legal Consultancy have also been appointed as international and local counsel respectively for the transaction.

The $1 billion Eurobond would be used to fund government's capital expenditure in the 2014 Budget.

It would also be used as counterpart funding for pipeline projects and the refinancing of domestic and external debt.

In 2013, Government successfully raised $1 billion from the international market in the second issue, which was heavily oversubscribed.

Mr Terkper denied reports that government had suspended plans to issue the bond due to gloomy market conditions.

He said Ghana could still take advantage of the market conditions.

Recently, Managing Director of the International Monetary Fund (IMF), Christine Largarde, indicated that Ghana could be taking on too much debt in dollars through the issuance of the Eurobond, adding that the development could further harm Ghana's economy.

Speaking on the sidelines of the 'Africa Rising' conference in Maputo, Mozambique, Christine Largarde said increasing yields on the bonds indicated that investors saw the bonds as high risks.

'Probably to those two messages – high yields and risks – the government of Ghana should be attentive and cautious about overloading the country with too much debt,' she said.

If the bond issue takes place this month, Ghana could pay a little over nine percent as interest which is the highest among its peers which have issued a sovereign bond.

The country's second Eurobond is said to be currently hovering around nine percent.

By Samuel Boadi