Economist, Prof. Eric Osei Assibey, has suggested that government must work to attract an interest rate within the region of eight percent for its Eurobond expected to be issued later this week.
His comment comes ahead of the start of the 2020 Eurobond roadshow to engage potential investors.
A government delegation led by the Minister of Finance, Ken Ofori-Atta, is scheduled to meet investors in some developed markets like the US and Europe.
The move is targeting to raise three billion dollars.ADVERTISEMENT
Last year, the government’s US$3 billion Eurobond issued in three tranches of seven, twelve and thirty years, attracted interest rates of 7.88, 8.13 and 8.95 percent respectively.
With this, Prof. Assibey told Citi Business News he is anticipating a rate of not more than eight percent this time around.
“…Because we are in an election year, potential investors will be quite careful and put all such factors together in their bid, and therefore it will not be too different from what already exists, and so it may still be around the same figure; maybe around 7.5 or 8 percent. But we have to ensure that the maturity period is much longer,” he stressed.
Since Ghana went in for its first Eurobond in 2007, it has issued seven of such bonds altogether.
This has raised an estimated 9.5 billion dollars with maturity periods spanning five to thirty-one years.
Commenting on whether the present market conditions will favour the response from investors, Prof. Osei Assibey responded in the affirmative, citing the potential rise in the US Fed rates, which will make it unattractive for investments in the US markets, hence some will resort to bonds in countries like Ghana, the general improvement in global market performance, as well as the recent positive credit rating on Ghana by Moody’s.
The proceeds of the Eurobond should among other things help the government support its planned expenditure, while shoring up foreign currency to at least stabilize the cedi for some time.