Financial Economist and Senior Lecturer at the University of Ghana Business School, Dr. Lord Mensah, has called on government to judiciously invest proceeds from the recently issued US$3 billion Eurobond, to ensure that the country attracts lower coupon rates in subsequent Eurobond issues.
According to him, investors are likely to accept lower rates in the future when they know their funds are going to be invested in self-financing projects.
The recently completed issuance of a US$3 billion dollar Eurobond in three installments attracted interest rates better than what was realized in similar bonds issued last year.
In an interview with Citi Business News, Dr. Lord Mensah said the used of funds from the recent Eurobond issue to service maturing debts, should be avoided.ADVERTISEMENT
“If we would get the lower rates beyond what we have now on the market, it will depend on how we treat the current issue. If it turns out that we are able to use the funds that are coming in for projects that can be self-financing, it then means that we won’t have to go unto the market for funds to refinance maturing debts.”
Gov’t secures US$3 billion Eurobond at cheaper rates
A delegation led by the Finance Minister, Ken Ofori-Atta on Tuesday, February 4, 2020, completed the issuance of a US$3 billion Eurobond in three installments with interest rates better than what was realized in similar bonds issued last year.
The three-tranche bond was sold with 7-year, 14-year, and 41-year maturities.
Government accepted US$1.25 billion for the 7-year-bond at a coupon rate of 6.375 percent.
This compares favorably to an exact tenor bond government issued in 2019 with a coupon rate of 7.875 percent.
Also, the government was successful in securing US$1 billion with a maturity period of 14 years at a rate of 7.75 percent. This rate also trumps the 8.125 percent the government accepted for a 12-year bond issued as part of the 2019 Eurobond.