Parliament has approved the 2018 Sovereign bond and Global Depository Note (GDN) , to use US$1billion to finance the 2018 Budget, up to US$1.5billion to refinance maturing external bonds.
Others include, about 500m from the GDN issue to refinance expensive domestic cedi denominated debt, the report of the finance committee on the request by government for the issuance of the 2018 Sovereign bond and Global Depository Note (GDN) captured.
Finance Minister, Ken Ofori-Attah explained that the macroeconomic performance achieved in 2017 has strengthened the economic outlook of Ghana. The depreciation of the Cedi to the US Dollar was about 4.9percent.
Current spreads on Ghana’s existing Eurobonds have however tightened. In view of the current impressive macroeconomic performance, government is convinced that the coupon on the new issuance will be highly favourable.
Government has also taken note of the declining coupon rates on the domestic coupon rates on the domestic bond market and the recent bond issuances by Nigeria and Kenya and is satisfied that a Eurobond issuance will register a competitive price compared to the domestic bonds.
The report also noted that the 2018 Budget Statement made provision for the raising of sovereign bond of US$1billion as well as a possible refinancing of the existing bonds.
In addition to the US$1.00billion needed to support the 2018 Budget, Government targets to engage further buyback and bond exchange operations to save Government some interest cost on existing Eurobonds and to re-profile expensive bonds issued between 2015 and 2017 at an average yield of 24percent.
Specific areas of expenditure from the proceeds include: Irrigation infrastructure, rehabilitation of warehouses and silos, fisheries and aquaculture inputs and infrastructure, education infrastructure, health infrastructure, road infrastructure, rail infrastructure.