Audio By Carbonatix
Government secured 2.9 billion dollars worth of bids in Eurobonds issue from foreign investors Thursday, but held on to only one billion dollars.
The negotiated yield on the one billion dollar Eurobond stood at 8.12 percent, marginally lower than 2013 figure of 8.5 percent.
This could mean that government would be paying about 40 million dollars every six months.
Proceeds of the bond would be used to finance some infrastructure projects outlined in the budget.
The Eurobond auction which began last week took the government’s team seeking foreign lenders to London, Germany, California, Boston and New York.
According some analysts inflows from this sovereign bond would go a long way to help stabilize the Ghana cedi.
Government decided to raise only one billion dollars instead of an initial 1.5 billion dollars target from investors.
A source close to the deal said 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.
Deutsche Bank, and Standard Charted Bank would act as lead managers for the Eurobond transaction.
It would be managed by Databank, EDC stock brokers and Strategic African Securities as the local partners in the transaction.
DENTOS will act as international counsel while JLD and MB legal consultancy would be local counsel for the deal.
The Bond is expected to mature on January 18, 2026.
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