Gov't cuts down Eurobond auction by 500 million dollars

Government has decided to raise only one billion dollars instead of an initial 1.5 billion dollars target from investors when it closes its Eurobond auction Thursday.

A source close to the deal has indicated government has decided to limit the amount because it no longer needs the extra 500 million dollars. 

Government was hoping to use 500 million dollars from the bond issue – the second this year – to pay off maturing debts.

Financial Consultant, Chris Odamteng, says government's decision may be appropriate.

“It could be that the cost that they [government] may incur or what they are actually being shown in terms of the likely investors is quite high”, the consultant said.

“If that is the point, then the best thing government has do is to reduce the amount they want to pick up from the market”, Mr Odamteng said.

He also said government may be looking at securing the funds internally, instead of foreign investors.

“If they [government] can get it cheaper locally, it also makes to reduce [the target]”, he added.

Meanwhile, government is now looking at paying about 8.5 percent as interest on the one billion dollar bond it hopes to auction Thursday.

This mean government is likely to be paying about 80 million dollars every year as interest on the funds raised.