- Ghana could not sell $83 million target of 20-year bonds to investors according to a Bloomberg report.
- Though the bond was meant to yield 20.2 percent of the offer, the country could only sell $30 million of the target.
- Investors said they couldn’t accept the offer due to the country’s currency risk.
Report says Ghana could not sell 20-year bonds yielding above 20% to investors
Ghana was able to sell only $30 million (GH¢162.1 million) out of the $83 million (GH¢450 million) target of 20-year bonds to investors, a Bloomberg report said.
Even though the bond was meant to yield 20.2 per cent of the offering,the report had noted that investors were not interested.
What the report says
According to the report, investors refused to take the offer due to the country’s currency risk.
It said, “The duration is too long for the level of investor confidence in the economy, Anthony Asare, the Accra-based head of treasury at GCB Bank Ltd., the nation’s biggest lender and a primary dealer in government debt. People are not very certain over that length of time.”
Adding that “The yield pickup is not sufficient to compensate for the risk, Mark Bohlund, an Africa economist at Bloomberg Economics, said in an emailed response to Bloomberg questions. If you’re a foreign investor then you not only care about the yield on the bond but also at what exchange rate you can repatriate your money.”
Ghana’s exit from IMF and the Inflation rate
Ghana completed a four-year International Monetary Fund program in April, which raised its fiscal deficit projection for the year to 4.5% of gross domestic product from 4.2% in a mid-year review of the budget.
Inflation quickened to 9.4% in the year through July as the cedi declined about 10% against the dollar. The Ministry of Finance warned earlier this month that the country is at “high risk” of debt distress.
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