Hon Seth Tekpeh
Hon Seth Tekpeh

The Minister for Finance, Hon Seth Tekpeh has indicated that On April 2, 2013 Cabinet approved the initiation of a second Eurobond transaction by Ghana, based on financing needs and anticipated market conditions, a transaction size of up to US$1,000 million was indicated.

The planned utilization of proceeds approved by Cabinet he said include Counterpart funding for projects already approved, mainly through loan agreements,Capital expenditures in the 2013 Budget Statement, Refinancing of maturing domestic and foreign debt to reduce the cost of borrowing.And ?Partial and gradual redemption of the Ghana 2017 Eurobond.

Parliamentary approval for the transaction was approved on 26 June 2013.

?As I have indicated in the past, the Eurobond transaction was based on a consideration of the following justifications:First ?the partial use of the bond issue proceeds to refinance maturing domestic debt will 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.?

Second, he mentioned, that the availability of the Eurobond proceeds will speed up the implementation of development projects in the 2013 budget. In particular, counterpart funding can be made available for previously approved projects to enable these projects to be completed, and that ?the early redemption of the Ghana?s debut 2017 Eurobond will reduce the rollover risk of refinancing the entire $750 million bond when it matures in 2017.After four months of preparation, Ghana launched its Euro bond transaction on July 25, 2013. Following a road show that took us 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 $750 issue for cash was well oversubscribed with orders reaching $2,157.

Simultaneously, Ghana invited holders of its existing US$750 million 8.5 per cent notes due 2017 to offer to exchange these existing Notes for up to US$250 million of new Notes. The exchange was highly successful with a total of $356 million being tendered.

The bond was officially issued on 7 August 2013. The final issue size was $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 and the Irish Stock Exchange. This is the first time Ghanaian companies have had the opportunity to purchase Republic of Ghana Eurobonds.

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