IFC Seeking Ghana Projects as It Names Adviser for Bond Sale

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The World Bank’s private lending arm is finding projects to fund in Ghana as it completes the groundwork for a local-currency bond sale that was delayed two years ago.

Soaring rates on Treasury bills prompted the International Finance Corp. to postpone plans for a 2 billion-cedi ($517 million) sale in 2013. The IFC has finished preparations for the issuance, which would be used as a benchmark by companies if they sell debt, according to Akua Opoku-Mensah, a financial officer at IFC.

“As and when we see an opportunity to come onto the market we will,” she said by phone from Washington on May 6. The IFC is discussing potential projects that would receive funds raised from the bond, she said.

Oil-producing Ghana’s borrowing costs are stuck near five-year highs because of lower crude prices, depreciation in the currency that’s the worst in Africa this year and a budget deficit that remains near 10 percent of gross domestic product.

The International Monetary Fund agreed last month to lend Ghana $918 million in a three-year program aimed at helping the government boost growth and narrow the fiscal gap. The country is investing in roads, water and power projects as it battles an electricity shortage and the slowest economic expansion in 20 years.

The IFC hired Standard Chartered Plc based in London and IC Securities Holdings Ltd. in Accra, Ghana’s capital, as advisers for the sale, said Opoku-Mensah.

Bond Program

The IFC started a program to sell medium-term, local-currency bonds in 2012 to fund development projects and cultivate domestic bond markets by providing a measure against which companies can issue their own securities. Elsewhere in Africa, it raised 15 billion Rwandan francs ($21 million) in the East African nation in May 2014 and issued debt worth 150 million kwacha ($20 million) in Zambia in 2013.

The IFC is also looking to sell medium-term notes in Kenya, Namibia, Botswana, Uganda and Nigeria. It issued its first Nigerian local-currency bond two years ago, worth 12 billion naira ($60 million), in a sale that wasn’t part of the program. The lender is in talks with investors about another issuance, after the country’s Securities and Exchange Commission changed rules to allow organizations like the IFC to sell debt longer than two years, Opoku-Mensah said.

“Nigeria is one of the countries that we remain extremely excited about,” she said. “Nothing is holding us back in Nigeria. There’s no hurdle. We’re making sure the timing works.”

Nigerian Debt

Local-currency government debt in Nigeria, Africa’s biggest oil producer, returned 5.9 percent so far in the second quarter, according to Bloomberg indexes, as prices for Brent crude gained 17 percent.

Yields on Ghana’s 91-day Treasury bills, used as a benchmark by local lenders in setting their borrowing costs, fell 77 basis points since reaching a 2015 peak in February to 25.08 percent at the latest auction on April 30. The Bank of Ghana is set to hold its weekly sale on Friday. Last month, the Finance Ministry canceled a sale of seven-year cedi bonds and offered a three-year bond in its place.

The cedi is Africa’s worst-performing currency this year, falling 17 percent to 3.867 per dollar by 2:45 p.m. in Accra, the capital. The naira, down 8 percent in 2015, stemmed the losses as the central bank tightened currency trading.

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