Modern Ghana logo

FEATURED: [trailer] Anas To Drop Shocking Video On Children At Orphanage Eating ...

17.12.2007 Education

Ghana Telecom issues two million-dollar bond

Ghana Telecom issues two million-dollar bond

The Management of Ghana Telecommunications Company Limited (GT), has announced the successful issuance of a 200 million-dollar corporate bond facility.

This restores GT's financial flexibility and access to vendor financing to support the company's much needed programme of upgrading and extension of fixed and mobile networks.

The bond adds no new debt to the company, representing a balance sheet structuring exercise designed to refinance the company's existing portfolio of maturing short term commercial obligations and generally extending the maturity profile of the company's debts.

The facility would significantly enhance the network's operations, a statement issued by GT in Accra on Monday said.

The amount is an aggregate principal amount of corporate bonds to be issued and the first US Dollar denominated Africa Corporate Bond outside South Africa and Nigeria.

The statement said the GT notes carried an 8.5 per cent coupon and amortized annually in five equal instalments of 40 million dollars, maturing on 29 October 2012.

The GT notes were arranged by Iroko Securities Limited and placed by Iroko Financial Products Limited and Exotix Limited.

According to Mr Joe Owusu-Ansah, Acting Chief Financial Officer of Ghana Telecom, "the successful placement of a bond of this size is further confirmation of the wisdom of our financing and business strategy which is principally aimed at reversing the erosion of our market share and indeed aggressively reclaiming our position as the leader in the Ghana telephony market".

He explained that the high level of investor interest shows that "the international capital markets share our view of GT's potential and prospects and I am especially pleased with the number of renowned investors that participated in the transaction."

Mr Guy Essomé, Director, Structured Products, Iroko Securities, said he was elated by the successful conclusion of the arrangement.

He said "the transaction represents the first foray of a Ghanaian corporate in the international capital markets."

Mr Guy Essomé said it comes closely on the heels of the Government of Ghana's own Eurobond issue and was priced at a 1% yield spread above that of the Government of Ghana.

"This is proof of the purpose and the success of the Government of Ghana Eurobond issue, one objective of which was the ability to establish a benchmark against which other domestic issuers could be priced," Mr Essomé said.

Mr Peter Bartlett, Managing Director of Exotix, described the deal as "ground-breaking because Ghana Telecom is the first corporate entity to issue a USD denominated bond in sub-Saharan Africa, except South Africa."

Twelve investors took part in the transaction illustrating that a large deal issued by an unrated borrower could be successfully managed and distributed by smaller investment banking houses like Exotix and Iroko Securities.

"We believe that this kind of African deal requires specialist handling by entities that have an established track record in Africa and a dedicated sales-team to handle the challenge of distributing relatively illiquid product."

GT said the transaction was proof that it was possible for large Ghanaian companies to diversify their source of funds and investor base by accessing offshore markets without government guarantee, in spite of the absence of a strong partner which can lend its name to their credibility.