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| Government bond |
In accordance with the implementation of the new debt management strategy outlined in the 2016 Budget Statement and Economic Policy of Government, the Republic of Ghana successfully, issued a second 5-year Bond through the ‘book-building approach” on 3rd March 2016. The “book-building” approach uses the Ghana Stock Exchange (GSE), rather than the Bank of Ghana auction to issue government medium-long term bonds. Under this approach, banks and institutions wanting to buy government bonds are required to put in bids through the order book opened by the GSE. The method is often used for issuing the sovereign bonds.
A total of 76 bids were tendered with a face value of GH¢776.44 million, out of which GH¢746.44 million was accepted. Offshore investors took up 67% of the total allotted bids withprice ranging from 23.50% to 25.75%.
Pricing was in line with the initial price guidance range of 23.50% to 25.75%. The closing price of 24.75% was tight at the lower end of the expected price range.
Part of the amount accepted will be used to settle the 3-Year Fixed Bond of GH¢416.00 million that matured on 7th March 2016 and the remaining amount would be allocated to meet Government’s refinancing and capital expenditure needs, as captured in the 2016 Budget.
The issuance of this bond gives further impetus to Government’s Medium Term Debt Management Strategy, which among others focuses on minimizing and/or replacing expensive shorter dated instruments with longer dated issuance. It also provides a positive boost to the development of our domestic debt market.
The relatively successful issuance of the bond, evidenced by the generally high subscription and the favorable pricing, is a reflection of the returning confidence in the Ghanaian economy and further confirms the bright medium term prospects for the economy. END
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