Ghana Plans to Sell as Much as $1 Billion in Eurobonds

Ghana, the first sub-Saharan African country outside of South Africa to sell Eurobonds, plans to seek as much as $1 billion in a second offer in July, the country’s Finance Ministry said.

Citigroup Inc. and Barclays Plc will manage the sale while EDC Stock Brokers and Strategic African Securities, both based in the capital, Accra, will co-manage it, the ministry said in an e-mailed statement today.

The world’s second-biggest cocoa producer joins Rwanda and Tanzania in tapping investor interest in sub-Saharan Africa, which is projected to have the second-fastest rate of growth this year after emerging Asia, according to the International Monetary Fund. Ghana’s $35 billion economy is forecast to expand 8 percent this year, according to the Finance Ministry.

“There’s strong investor appetite for the bond based on economic performance and medium-term outlook,” Finance Minister Seth Terkper told reporters in Accra today.

Ghana sold its debut $750 million Eurobonds in September 2007 at 8.5 percent. Yields on the 10-year notes rose 14 basis points, or 0.14 percentage point, to 5.09 percent by 5:17 p.m., the highest since Sept. 4, according to data compiled by Bloomberg.

“The government will be able to issue the new Eurobond at more favorable terms than in 2007,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd.’s London unit, said in a e-mail today.

Budget Deficit

Proceeds of the sale will be used for capital expenditure, projects that will be self-financing, social projects laid out in the country’s budget and refinancing debt, Terkper said.

Ghana’s failure to narrow its budget deficit more quickly may add to debt, threatening a downgrade of the nation’s B+ rating, Fitch Ratings said in March. The country plans to narrow the gap to 9 percent of gross domestic product this year from 12.1 percent in 2012, according to the finance ministry.

“The market will want to see a comprehensive fiscal consolidation strategy during the roadshow,” Gadio said. “This is likely to influence the pricing of the new Eurobond.”

SN Denton and JLD & MB Legal Consultancy will provide legal advice, according to the ministry’s statement. The plan needs to be approved by lawmakers in the country’s Parliament, it said.

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