Bond Issues Ignore Minority’s claims on bond auctions – Finance Ministry

In a statement issued by the Ministry of Finance it said that “the issuance was not shrouded in secrecy nor was it “cooked” for any particular investor”.

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The Ministry of Finance has called on the general public to disregard the claims made by the minority in parliament on the recent $2.25 billion issued by the Bank of Ghana.

The Minority alleged that ninety-five percent of the bond was purchased by the very close friends of the Finance Minister.

The Minority Spokesperson on Finance Cassiel Ato Forson claimed that a non-executive director on the board of investment firm, Franklin Templeton that purchased a majority of the bonds is also the Chairman of the Enterprise Group; a company closely aligned with the private interests of the Finance Minister, Ken Ofori-Atta and the Attorney General, Gloria Akuffo.

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However, in their response, the Ministry said that “the issuance was not shrouded in secrecy nor was it “cooked” for any particular investor”.

“The Bookrunners, (Barclays, Stanbic and SAS), on behalf of the Ministry of Finance have been mandated since 2015 to issue these domestic bonds on a regular basis as per the debt issuance calendar which Ministry of Finance (MoF) puts out every quarter”.

“Also the book runners announce and publish every impending bond issue to the market, the week of issue and provide price guidance to the market. This particular bond issue was no different and was done in conformity with the established process. It was announced by the Book Runners to the market on March 30, via email and same published on MoF and Bank of Ghana (BoG) websites with settlement on April 3.”

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It also denied claims that Franklin Templeton was the only participant in the process. It added that there were over 25 other buyers including other foreign entities, who all brought in dollars to convert to cedis to buy the bonds.

“This bond issue, like all the others done prior could not have been designed to favour any single investor. The conventional processes for the issue of bonds using the book building approach were adhered to in this particular issuance. It is our understanding that the said investor engaged various market participants and other key institutions including the IMF before deciding to participate in the bonds. It is worth noting that local investors also participated”.

The said investor participated in the issuance like they have always done since 2006 through their local Primary Dealer, Barclays Bank and their local custodians, Standard Chartered Bank and Stanbic Bank.

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“To have obtained preferential treatment, all the above-mentioned institutions would have had to conspire to do so, a situation which is unfathomable.  The investor in question, FT, has held Government of Ghana bonds of up to USD 2 Billion prior to this transaction. Indeed FT has been buying and investing in government bonds since 2006,” it argued.

Parliamentary Approval

The statement insisted that like other domestic bonds issued under this bond program since 2015, it did not require the approval of Parliament.

“Approval was given under the initial application to Parliament in the 2015 Budget Statement and Economic Policy document, to run such a bond issuance program.  The Ministry of Finance has the mandate to fund the deficit as contained in the budget approved by Parliament through the issuance of debt instruments and to manage the countries debt stock”.

The statement added that the issuance has brought in a significant amount of foreign currency, which was converted into cedis to purchase the bond. This has also helped strengthen the value of the Cedi.

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