Sectors & markets

Ghana raises USD 2 billion Eurobond

The government has sold dual-tranche Eurobonds worth USD 2 billion on Thursday with 10- and 30-year maturities.

The 10-year bond raised USD 1 billion at an interest rate of 7.627% while the first 30-year bond raised another $1 billion at 8.627% and mature in 2029 and 2049 respectively.

Guidance for the May 2029 bond was set at 7.75% to 7.875% while the May 2049 was in the 8.75% to 8.875% bracket.

The notes were first marketed in the low 8% area yield and low 9% mark.

Total books passed USD 5.5 billion, evenly split between the two tranches, lead advisers said.

“It’s a marked success for Accra because they got a low yield and a bigger size,” a sovereign debt market watcher told Reuters. The sale is Ghana’s sixth one since its debut in 2007.

Lead advisers for the sale were Bank of America Merrill Lynch, Citigroup, JP Morgan and Standard Chartered.

Ghana is rated B3/B-/B.

The government has indicated that it plans to use some of the proceeds to refinance debt and up to USD 750 million as revenue for its 2018 budget.

The liability management for the tender is about USD 700 million notional amount, which means that plus the premium, Ghana will pay about USD 819 million to retire the 2022 bonds and still be left with another USD 750 million new money to spend for the budget. This makes a total of USD 1.569 billion, leaving an extra USD 431 million, which Ghanaians should expect government to take and put in sinking fund and buy back bonds if and when the prices are attractive.

The Finance Minister Ken Ofori Atta said the government plans to direct the funds to areas such as irrigation, infrastructure, rehabilitation of warehouses and silos, fisheries and aquaculture inputs, education, road and rail infrastructure.