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US investors control Ghana’s Eurobond -Terkper

The Finance Minister, Seth Terkper has revealed that majority of the recently issued $1 billion Eurobond, is owned by investors from the United States of America with a total stake of 60%. According to him, investors from the United Kingdom also purchased 21% of the bond while those from Europe also bought 15%. He also added that Asian investors own 2% shares of the bond, with 2% coming from elsewhere.
Hon. Terkper stated that on April 2, 2013, Cabinet approved the initiation of a second Eurobond transaction by the country. He indicated that based on the financing needs and anticipated market conditions, a transaction size of up to US$1,000 million was indicated. The Finance Minister announced this at the Flagstaff House (the seat of government) on Tuesday when he presented the details of the Eurobond transaction to the media.
Giving further details of the Eurobond transaction, the Minister said part of the bond proceeds will be used to refinance maturing domestic debts totalling US$341 million, in order to reduce the reliance on the short-end of the market, especially for domestic capital projects, and the long lead times being experienced in sourcing and implementing some projects related to multilateral and bilateral funds. “In addition, given that access to concessional funds will dwindle as a result of the country’s attainment of a lower middle income status, the tapping of the global bond market and provisioning for existing bonds will strengthen Ghana’s credentials as a regular and responsible borrower in those markets,” said the Minister.
 He indicated that, the availability of the Eurobond proceeds will speed up the implementation of development projects in the 2013 budget and US$307 million is budgeted for that purposes. The Daily Express has gathered that, the counterpart funding of US$102 million, can be made available for previously approved projects to enable these projects to be completed. Meanwhile, US$250 million of the proceeds has been set aside for the early redemption of Ghana’s debut Eurobond which is maturing in 2017 to reduce the rollover risk of refinancing the entire US$750 million bond when it matures.
Hon. Terkper noted that after four months of preparation, Ghana launched its Eurobond transaction on July 25, 2013. Following a road show that took the minister and other partners to the U.K., Germany, and the U.S.A., Ghana’s bid to raise US$1 billion from the international capital markets was oversubscribed. “The order book for the initial US$750 issue for cash was well oversubscribed with orders reaching US$2,157,” said Hon. Terkper, adding that simultaneously, Ghana invited holders of its existing US$750 million, which is 8.5 per cent notes due 2017.
However, “the offer for exchange to these existing Notes is up to US$250 million of new Notes”. The exchange was highly successful with a total of US$356 million being tendered. The bond was officially issued on August 7, 2013. The final issue size was US$1 billion issued at a coupon rate of 7.875%. The proceeds have been lodged with the Bank of Ghana. The Notes will be listed on the Ghana Stock Exchange (GSE) and the Irish Stock Exchange (ISE). This is the first time Ghanaian companies have had the opportunity to purchase the Republic of Ghana Eurobonds.

Story by: Fred Yaw Sarpong


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