Ghana Planning to Sell Debt in 7% Coupon Range

Ghana is seeking to issue up to $2.5 billion worth of eurobonds in the coming weeks with a coupon in the 7% range, a rate well below previous sales, the West African nation’s finance minister told Reuters in an interview on Tuesday.
The debt offering, for a country that still struggles with a debt burden that last year was equivalent to roughly 69% of its overall economic growth, coincides with government plans to leave a $918 million credit program with the International Monetary Fund by year-end.
Asked why an investor would put money to work by purchasing bonds of a highly leveraged nation that is exiting the IMF program with still high inflation, Ofori-Atta said: “Why wouldn’t you want to give us money? You are looking for yield? I’m giving you yield.”
“I think we will go long, as much as we can ... So this time we would look to see whether we could do 20 or 30 years, but that is all based on advice,” Ofori-Atta said. Citibank, JPMorgan, Bank of America and Standard Chartered are leading the offering, he said.
The majority of the debt offering, however, will be focused on retiring higher yielding debt, perhaps as much as $1.5 billion to $1.75 billion, he said. “I think we are likely going to go for $750 million of new money, and if conditions are good, swap out an amount of about $1.5 billion to $1.75 billion,” he said.
Ghana’s most recent eurobond, a senior unsecured bond maturing in 2022, sold at par in September 2016 carrying a 9.25% coupon. However, it last traded with a yield of 4.725%, according to Thomson Reuters data. Ghana’s credit is rated junk by the major credit rating agencies.
“We had sort of derailed from the IMF program by the time we got into government,” Ofori-Atta said. However, he highlighted improving economic data. For example, inflation was at 15.4% when the new government of President Nana Akufo-Addo took over in January 2017. Last month, annual consumer price inflation was 10.4%.
He said Ghana was also interested in diversifying its borrowings away from US dollars, potentially looking at issuing in yen at some point after the economy strengthens.