The Head of Client Coverage at First National Bank Ghana, Richard Kokoih, has affirmed the bank’s commitment to supporting government in its bond-issuance programme that will increase the availability of funds for financing developmental projects.
According to Mr. Kokoih, the important role of banks like First National Bank in supporting government and corporate institutions in the bond issuance process cannot be underestimated at this time.
Commenting after a member of the FirstRand Group, RMB Nigeria, won the 2020 Merchant Bank of the Year for the third consecutive year and 2020 Debt Arranger of the Year for the second consecutive year at the Business Day awards in Nigeria, Mr. Kokoih said First National Bank has access to a pool of investors who, when called upon, would be willing to invest in government and corporate securities at good rates.
“We are appointed lead arrangers/managers, co-arrangers/managers or book-runners due to our access to a wide range of investors, both locally and globally, and we support with the distribution end-to-end,” Mr. Kokoih says.
“It is even the reason why apart from government, corporates may start speaking to their bankers today to understand the process of debt capital market issuance. And let me say, when we either lead or play a role in bond issuance we ensure that the beneficiary institution or government receives good rates, or what we call value for money.”
If considered as part of the arrangers for Ghana’s bond programme over the years, First National Bank will look at raising funds that are used to provide long-term currency finance for government businesses and also protecting the nation from foreign-exchange risks, the head of coverage for First National Bank added.
“We are delighted to put our capital markets expertise, extensive Africa presence and knowledge of international and local markets to work in partnership with the government of Ghana on its landmark initiatives – like the century bond that brings funds which help government meet its development goals,” Mr. Kokoih said.
In recent times, the international and local capital markets have accepted risk in Sovereign issuances on the international scene; and Ghana was able to issue its first long-dated maturity bonds, worth billions, running into 2051 tenors. In April 2019, Ghana went to the market and successfully priced its US$3billion Eurobond issuance when the appetite and comfort from investors for the country’s bonds was high.
Explaining why corporates should be encouraged to issue bonds, Mr. Kokoih said bonds usually have longer maturity (5-10 years or more), larger funding sizes due to the more liquid global or domestic investor pool and have no amortisation requirement, which reduces the pressures on short-term cash-flow.
Mr. Kokoih further recommended that local corporate firms work on their books and consider issuing bonds which will help in extending the maturity profile of the debt, widening the issuer’s institutional investor base which will benefit future equity and capital market activities, provide greater operational flexibility and mitigate any liquidity concerns.
Currently, there are nine corporate clients who have issued corporate bonds amounting to about GH¢7.3billion (US$1.5billion) – with E.S.L.A Plc accounting for over 90 percent (GH¢5.66billion) of the issuance.