Government has put on hold plans to issue its fifth Eurobond which was scheduled to take place next week.
Government was seeking to raise 700 million dollars, majority of which was to be used to retire Ghana’s first Eurobond which matures next year [2017].
Finance minister Seth Terkper early this week [August 1-3,2016] led a team of government officials as well as financial advisors to convince investors in London and New York to patronize Ghana’s next Eurobond.
But a statement from the finance ministry on Thursday said government has put the issue on hold till market conditions are right.
‘The Government will continue to build on this dialog with international investors while monitoring the markets and the IMF Board process with respect to the Third Review of the Program and will issue new notes at the optimal time and the right conditions’.
Instead government ‘will proceed with a capped cash tender offer, up to 100 million dollars of the Ghana 2017 bonds issued in 2007, in line with Ghana’s buyback program’.
Despite receiving positive feedback from investors on the ongoing fiscal consolidation process Ghana was unable to convince investors to dish out cash at a rate lower than 10.75 percent obtained in the last Eurobond.
Government has been changing the dates for the issue for some time now.
Earlier some economists had warned government will be unable to get a lower rate than its last Eurobond which attracted a coupon rate of 10.75 percent if it fails to issue the bond in the first quarter of this year.
Ghana’s rising debt levels, economic challenges, upcoming elections and huge budget deficit were expected to influence the coupon rate for this Eurobond.
Ghana’s program with the IMF – the Extended Credit Facility program is expected to address Ghana’s high debt levels as well as huge budget deficit but parliament early this week rejected one of the IMF’s conditions – zero financing of government’s budget from the central bank, which was aimed at dealing with the debt levels.
It is unclear whether the bond will be issued at all this year but according to the statement from the finance ministry ‘the Sinking Fund will be used to purchase securities as indicated in the 2016 Review of Budget presented to Parliament in July 2016’.
