Information gathered by Citi Business News indicates that the Finance Minister Seth Terkper is currently leading a government financial team to convince investors in London and New York to patronize Ghana’s upcoming Eurobond next week.
The team is said to include government’s financial advisers, officials from the Bank of Ghana, as well as financial experts employed by the country to direct the team on steps to take.
Speaking recently to Citi Business News, Seth Terkper explained that government needed the money to retire the 2017 Eurobond since there was no plan in place to pay back.
Disputing earlier announcements that Ghana may raise 1billion dollars, Mr. Terkper insisted that government will seek between 500 and 750 million dollars.
He noted that part of the fund will be used to retire half of the 2017 Eurobond this year while the remaining is cleared by next year when it matures.
Expectation of coupon rate
Meanwhile, a senior lecturer at the University of Ghana Business School, Dr. Lord Mensah has cautioned that with the current economic conditions of the country, Ghana may get a high coupon rate since investors are risk averse.
“If you have money and you are going to place it in an environment where they have serious energy problem, where inflation is very high, and exchange rate, in as much as it’s relatively stable you can’t tell whether it’s artificial or natural dynamic, you will be shaky,” he said.
Dr. Mensah maintained that investors are aware of the economic conditions of the country, hence will demand high interest which will affect the coupon rate.
“It is going to affect our coupon rate. We have to promise external financiers because the conditions are not favorable they will demand higher interest”, he said.
He warned that Ghana would succeed in accepting a good coupon rate if it does not go beyond the Average African Sovereign bond rate.
“We may go above the average African country cost of borrowing of 10.25 percent to entice the investors to participate in the bond,” he said.
Ghana’s first Eurobond
Ghana in 2007 issued its first Eurobond and successfully raised $750 million at a coupon rate 8.50%.
There are currently three more Eurobonds outstanding, with maturity profiles including August 2023, January 2026