Ghana secures $3 billion Eurobond at cheaper rates, almost 350 percent subscription received

Ghana has completed the issuance of a $3 billion Eurobond in three instalments with interest rates better than what was realised in similar bonds issued last year.

Ghana secures $3 billion Eurobond at cheaper rates, almost 350 percent subscription received

This was done by a delegation led by the Finance Minister Ken Ofori-Atta on Tuesday, February 4, 2020.

The three-tranche bond was sold with 7-year, 14-year, and 41-year maturities.

A member of the delegation in an interview with journalists explained that the government accepted $1.25 billion for the 7-year-bond at a coupon rate of 6.375 percent.

This compares favourably to an exact tenor bond government issued in 2019 with a coupon rate of 7.875 percent.

Also, the government was successful in securing $1 billion with a maturity period of 14 years at a rate of 7.75 percent. This rate also trumps the 8.125 percent the government accepted for a 12-year bond issued as part of the 2019 Eurobond.

The last of the three bonds issued was a 41-year bond, which happens to be the longest dated bond issued by an African country. The government accepted to borrow $750 million at a rate of 8.75 percent for the longest dated bond which matures in 2061.

The yield for the longest-maturity instrument dropped from the initial guidance of 9.125% and is the highest-yielding sovereign Eurobond of the year so far.

Prior to the 41-year bond, the longest tenor bond issued by an African country was a 31-year bond with a coupon rate of 8.95 percent also issued by Ghana in 2019.

Although the government set out to borrow $3 billion in its eighth Eurobond appearance, it received offers to the tune $15 billion – reflecting investors’ appetite for Ghana’s bond

The proceeds from the bond issuance are expected to be used for refinancing of some maturing debts with the rest committed to provided infrastructure.

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