Ghana Said to Seek $1.5 Billion Debt With Yield of 8.5%-9%

  • Government getting offers for debt just below 10% level
  • Ghana faces challenging market conditions on China, U.S. rates

Ghana is seeking bids for $1.5 billion of Eurobonds at lower yields than it received during investor meetings last month, according to a person familiar with the government’s plans.

The government is getting offers just below 10 percent, said the person, who asked not to be named because market rules ban discussion of offers. Ghana would view yields of 8.5 percent to 9 percent as respectable, the person said. The cedi gained as much as 0.8 percent after the news, erasing losses for the day.

The world’s second-largest producer of cocoa is facing challenging conditions in debt markets because of the economic slowdown in China, its largest trade partner, and the possibility the U.S. Federal Reserve may raise rates as soon as this month, reducing demand for riskier assets, the person said. The government turned to the International Monetary Fund for an almost $1 billion three-year loan this year to help narrow a funding gap amid the slowest economic growth in 20 years.

“The news triggered release of dollars onto the market by people who were holding on to it,” Michael Otu Fiaw, research analyst at Accra-based NDK Asset Management, said by phone on Monday. “The news tells you that the cedi is going to gain in coming days because of the expected inflows from the Eurobond.”

The cedi gained 0.6 percent to 3.708 per dollar at 5:10 p.m. in Accra. The yield on Ghana’s $1 billion Eurobond due in August 2023 has risen 192 basis points, or 1.92 percentage point, this year to 11.1 percent. The currency has dropped 14 percent against the dollar during the same period amid lower oil prices, the worst cocoa crop in five years and inflation near 17 percent.

“It’s quite remarkable that a vulnerable frontier market like Ghana is even
contemplating launching a Eurobond in the current conditions,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by phone on Monday. “ If it gets to launch a Eurobond then it’s gonna have to pay up.”

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