Ghana has sold $2 billion worth of Eurobonds, following similar steps of continental peers like Angola, Ivory Coast, Kenya and Nigeria.
On Thursday, Ghana sold $2 billion worth of dual-tranche Eurobonds with 10- and 30-year maturities, and according to government and transaction sources, it will pay issuer-desired yields.
The west African sovereign sold $1 billion each of the 10-year notes maturing in 2029 and a 30-year with 2049 maturity at 7.625 percent and 8.625 percent, respectively. And also set rates for the May 2029 bond at 7.75 percent to 7.875 percent while the May 2049 was in the 8.75 percent to 8.875 percent range, as reported by Reuters.
This new debt offering, for a country that is struggling with a debt burden that could hit 69 percent of its GDP by year-end, coincides with the government’s plan to leave a $918 million credit program with the International Monetary Fund (IMF).
Ghana, which is the world’s second largest Cocoa producer, plans on using the proceeds to retire higher-yielding debt, and the remaining as revenue for its 2018 budget.
Lead advisers for the sale were Bank of America Merrill Lynch, Citigroup, JP Morgan and Standard Chartered.
This latest issue by the West African country brings the amount of debt issued by African countries –Egypt, Nigeria, Kenya, Senegal and Ivory Coast– to the total of $14.8 billion of Eurobonds this year. The total Eurobonds issuance since the beginning of 2018 is close to the overall $18 billion Eurobonds issued in 2017 and exceeds the total bond sale of 2016.
However, this lovefest with international debt markets and the issue of record levels of debt in foreign currencies have led to the IMF’s latest critical warning of growing risk of debt distress. The financial watchdog is of the opinion that this heavy borrowing and gaping deficits could affect the medium to long-term outlook of resource and oil-dependent countries; and instead, sub-Saharan countries should begin to look to private investments. The region currently has the lowest private-investment-to-GDP ratio among developing regions in the world, according to IMF.