Ghana sold its second issue of $750 million of Eurobonds after investor meetings in Europe and the U.S., with yields priced over Nigeria’s latest dollar-bond issuance, two people with knowledge of the transaction said.
The yield for the 10-year, dollar-denominated notes was 8 percent, according to the people, who asked not to be named as the details are private. That compares with 6.63 percent in Nigeria’s sale of 10-year bonds on July 2 and 6.875 percent Rwanda got in an April issue. Ghana had planned a sale of as much of $1 billion after stops in London, Frankfurt and Los Angeles, Adams Nyinaku, head of treasury at the Accra-based Bank of Ghana, said July 11.
The bond sale in the world’s second-biggest cocoa producer took place as African nations tap appetite for assets from the world’s fastest growing region after developing Asia. Like Rwanda, Ghana is rated five steps below investment grade at B by Standard & Poor’s, compared with BB- for Nigeria, which is three steps away.
Emerging borrowers have raised at least $13 billion since July 10, when comments from Federal Reserve Chairman Ben S. Bernanke tempered speculation the U.S. would scale back stimulus.
Developing-nation yields had soared to 5.54 percent June 24, the highest since 2011, as Bernanke signaled he may reduce bond buying that fueled gains in emerging assets. Yields were at 4.87 percent yesterday, the Bloomberg USD Emerging Market Sovereign Bond Index shows.
“At first glance, the new bond looks cheap, but this suggests that Ghana is offering a decent premium to compensate investors for the risks associated with the country’s fiscal and macroeconomic imbalances,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in e-mailed comments today.
Ghana’s budget deficit jumped to 12.1 percent of gross domestic product in 2012 from 4.3 percent the previous year as the government boosted salaries for civil servants. The Finance Ministry is forecasting the gap will narrow to 9 percent this year. In the first four months of 2013, the shortfall was 3.8 percent of GDP, compared with a forecast of 3 percent, the central bank said in May.
Nigeria’s bond sale, which was oversubscribed, was “encouraging,” Ghanaian Finance Minister Seth Terkper said on July 8. The nation sold $500 million each of five-year and 10-year bonds on July 2, with the shorter-date notes yielding 5.38 percent.
Ghana’s investor meetings this week were arranged by Barclays Plc and Citigroup Inc., according three people with knowledge of the matter. The yield on the nation’s $750 million Eurobonds due October 2017 advanced 28 basis points, or 0.28 percent, to 5.98 percent at 5:03 p.m. in London, the highest in a week.