Ghana Sells $1B Eurobond Amidst Fiscal Difficulties

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Ghana sold a $1 billion Eurobond on Thursday at a coupon rate of 8.125 percent, lower than analysts had expected given the fiscal difficulties faced by the West African producer of cocoa, gold and oil.

The country is a rarity in West Africa due to its record of political stability and sustained strong economic growth, but it is wrestling with escalating inflation, a falling currency and a stubbornly high budget deficit.

The bond was oversubscribed with orders of up to $3 billion, said Finance Minister Seth Terkper, who was in New York for the bond roadshow.

Ghana sold Eurobonds in 2007 and in 2013, when the yield was 8 percent, but analysts expected a higher rate this time. The rate reflected the appetite for relatively risky sovereigns given lower yields in developed markets, they said.

“Investors saw fundamental long-term value in the Ghanaian economy. We have always emphasized that the mid-term prospects for Ghana were bright and with the coming on board of the IMF, we hope to come out of our short-term challenges pretty soon,” Terkper said in a statement.

Ghana is set to begin talks with the International Monetary Fund on Tuesday on an assistance programme aimed at restoring fiscal stability and promoting economic transformation.

The bond is a soft amortising bond, amortising in years 2024, 2025 and 2026 with principal repayment in three instalments of $333 million in 2024 and 2025 and $334 million in 2026, Terkper said.

Written by Matthew Mpoke Bigg and Kwasi Kpodo | From Reuters

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