Government plans to borrow an amount of GHC25.2 billion (GHC25,270 million) for the remaining five months of 2016.
The amount, which would be borrowed between August and December 2016, will be used to rollover a forecast of maturities to meet government’s financing requirements.
The monthly breakdown are August – GHC6 billion (GHC6,010 million); September – GHC5 billion (GHCC5,020 million); October – GHC4.9 billion (GHC4,950 million); November – GHC4.9 billion (GHC4,930 million); and December – GHC4.3 billion (GHC4,360 million).
As a reflection of the country’s high public debt, an amount of GHC23.8 billion (GHC23,853.56 million), out of the GHC25.2 billion (GHC25,270 million), will be used to rollover a forecast of maturities with the remaining amount of GHC1.4 billion (GHC1,416.44 million) being fresh issuance to meet government’s financing requirements.
GHC30.7bn borrowed for 1st half of 2016
According to Ministry of Finance data, the aggregate borrowing amount for the 1st half of 2016 is GHC30.7 billion (GHC30,730 million), out of which forecast maturities is GHC27.7 billion and net issuance is GHC2.9 billion (GHC2,951 million).
$1 billion Eurobond
Early this month, government suspended its planned 2016 Eurobond issue to raise $1 billion to retire maturing securities due to high interest rates demanded by investors.
But the Finance Minister, Seth Terkper, has hinted of a return expressing the hope that Ghana will now attract good interest rate following recent developments in inflation and the coming on board of the Tweneboa Enyenera Ntomme (TEN) oilfields, which may prompt investors to offer interest rates corresponding to the market conditions.
The amount to be borrowed for the rest of 2016 was contained in government’s revised issuance calendar for August to December 2016 posted on the website of the Ministry of Finance.
This follows government’s revised fiscal projections for 2016 in the mid-year review budget presented to Parliament.
“We make reference to our publication, informing you of government’s aggregate borrowing amount for the third quarter of 2016 of GHC16,830 million, out of which forecast maturities was GHC14,910.61 million and net issuance of GHC1,919.39 million.
“Accordingly, this necessitated the revision of the issuance calendar to ensure consistency with government cash flow forecast and market conditions.
“Based on the above, a new issuance calendar for August to December 2016 was developed in line with the MTDS that specifies the aggregate amounts to be raised by instruments in the period,” government explained.
Per the calendar
According to government, the revised issue calendar aims at continuing the objective of lengthening the maturity profile by reducing the short-term borrowing.
It noted that on average, the 91-day and 182-day debt instruments would be issued weekly and an amount of GH¢60 million would be issued every 2 weeks for the 1-Year Note, through the primary auction.
It explained that settlement would occur on the first and third Monday of each month.
The release said the 2-Year Note will be issued monthly through the primary auction, with settlement occurring on the second Monday of each month.
Additionally, the 3-, 5- and 10-year issues will be done per the calendar through the book-building method, settlement on the last Mondays of each month.
It explained that GHC400 million for the 5-Year Bond in August 2016 will be raised through reopening of the existing 5-Year Bond (coupon of 24.75%) maturing July 19, 2021, with settlement on August 29, 2016.
According to the statement, the 5-Year Bond of GHC1 billion in September 2016 may be issued partly in a United States (US$) dollar equivalent bond, with settlements on September 12 and 26 for the cedi and US dollar bonds respectively.
“These instruments may be reopened to create liquidity in the instrument.
“We believe that a more accurate detailed borrowing plan, presented well in advance, should meet the requirements of market participants as it will ensure greater predictability and transparency,” it added.