Accra, Ghana, March 20, 2019//-Ghana has increased its debt stock by $3 billion through the issuance of its latest Eurobond on the international market.
With addition of the $3 billion Eurobond to the current debt stock of GH¢172.9 billion as at the end of November 2018, the country’s debt stock will stand at GH¢337.9 billion.
Recently, Ivory Coast issued 12-yr bond just above 5% coupon rate and 30-yr bond at 6.625%. For the same maturity period, whereas Ghana had 8.125% and 8.95% respectively.
By implication, if Ghana’s macroeconomic fundamentals and political risk climate influenced investors’ decisions, then Ghana has not improved in reference to its 2016 peer, Professor John Gatsi, economist at the University of Cape Coast (UCC), explained.
He continues: “With bonds, you start coupon repayment after six months if it is semiannual bond or 12 months if it is annual bond. So, government will start repayment with the bond proceeds if it faces liquidity challenge at the verge of experiencing defaults. At the same time, the public debt stock continues to escalate”.
So, the Eurobond’s proceeds, as planned by government, will immediately start paying near default debts (the practice called refinancing) and within the year, also start paying its own coupon”.
He explained that government would be happy not because it got the best coupon rate in the ECOWAS region nor the first ever oversubscribed bond issuance. Government’s joy will be about the forex liquidity coming in to slow pressures on the cedi, Prof Gatsi added.
In September 2016, with 400% oversubscription of Eurobond in an election year, we were comparing oversubscription and coupon rate with Ivory Coast and Rwanda.
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