wpid-money-bag-ghana-cedi.jpgACCRA, July 26 (Xinhua) – -Experts expressed mixed reactions here?on Friday?about the outcome of Ghana?s second Eurobond issued in New York?on Thursday.
?? The country went into the Eurobond market to seek one billion U.S. Dollars, among other things, to finance infrastructure projects approved in the 2013 budget
?and?restructure some domestic debts and service the 2017 (750 million) Eurobond issued in 2007.
?? The result was an over-subscription by another one billion dollars, according to a press release issued here?by the Ministry of Finance.
?? The team, led by minister for Finance, Seth Terkper, however accepted 750 million dollars from?these investors at a yield of 7.8 percent.
?? ?The issue will total 750 million dollars ?for cash with maturity period of 10 years and a coupon rate of 7.875 per cent, which would be paid semi-annually,? the statement signed by Cecilia Akwetey, Head of Public Affairs at the ministry, added.
?? The statement explained that an offer would be made to holders of Ghana?s first Eurobond to exchange into the new bond which will result in the issue of an additional amount of up to 250 million dollars of the new bond, bringing the total of the new issue to 1 billion dollars.
?? The Ghanaian team had?engaged institutional investors and fund managers from London, Frankfurt, San Francisco, Los Angeles, New York, and Boston to promote the sovereign bond.
?? ?The over-subscription is a sign of great confidence in the economy by investors, confirming that we have a strong and stable economy,? said Head of Policy Evaluation and Monitoring (PEMO) Unit at the ministry of Finance, Samuel Danquah Arkhurst.
?? In an interview with Xinhua, Arkhurst described the fiscal challenges faced by the economy as temporary, adding that the entire macroeconomic environment was not in a vulnerability situation.
?? ?We must however keep our eye on the ball so that the Foreign Exchange situation does not become a source of vulnerability in the economy,? Arkhurst stressed.
?? The Executive Director of economic think-tank, Center for Policy Analysis (CEPA), Joe Abbey, was however worried about the close to eight percent yield on the sovereign bond.
?? He blamed the result of the sovereign bond issue on the highly charged partisan political atmosphere?in the country, which had resulted in a huge economic consequence.
?? ?We are paying a heavy price for not being able to lower the political tension in the country after the elections,? he pointed out in an interview with Xinhua.
?? He also believed that the election year spending that resulted in a high fiscal deficit also affected investor confidence, hence the higher yield.
?? He however conceded that the yield was not too bad when compared with Nigeria with more oil resources getting its bonds at 6.5 percent.
?? ?The announced change in the monetary policy in the United States of America, where the treasury says it would start phasing out its quantitative easing gradually is another huge deciding factor,? Abbey held.
?? The Executive Director of another policy think-tank, IMANI Ghana, Frankline Cudjoe, also described as high the close to eight percent yield on the bonds.
?? He however described as prudent the decision of the team to issue a separate 250 million dollars bond to start restructuring the first 750 million dollars bond.
?? ?I think it was a wise decision taken by Terkper and his team to demonstrate to the investor community that they (the government) keep their word,? Cudjoe added.
?? The Ghana team was led in the transactions by?Barclays Bank and the Citi Group with the Co-Managers being EDC Stock Brokers and Strategic African Securities (SAS). The international legal counsel is SN Denton and the local legal counsel is JLD & MB Legal Consultancy.
?? In the wake of government?s decision to issue a second sovereign bond, critics suggested that the economy was broke, and government was looking for credit to pay domestic debts.
?? Some suggested that the bond issue would fail as investor confidence in the economy had waned due to the fiscal deficits and the recovering U.S. economy.
?? Finance Minister Seth Terkper however asserted that the economy was only facing temporary fiscal challenges.
?? Prof. Peter Quarter, Senior Economist at the Department of Economics, University of Ghana, Legon, agreed with this assertion.
?? ?The economy is not very stable, but it is not broke as being described. If a business has a low bank balance, that does not mean the business is broke because it has assets and income sources to bring in the finances,? he argued.
?? The government has set a 9.0 percent target for both its current accounts deficit and?annual inflation, compared with the 12 percent deficit recorded last year and the current over 11 percent inflation under a re-based basket.? Enditem.
?Justice Lee Adoboe
Edited by Ray Ankomah


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