Fidelity Bank, Stanchart lead issuance of ESLA backed bond

Government has appointed Fidelity Bank and Standard Chartered Bank as Joint Lead Managers for the issuance of a long-term bond to tackle the energy sector legacy debts.

As lead managers, the two banks are expected to work closely with members of their respective syndicates/consortia and any other local banks/financial institutions as co-managers with the view to building capacity locally and facilitating knowledge transfer.

A statement from the Ministry of Finance on Thursday June 15 said the two banks were chosen after an evaluation of about 10 proposals received in response to a request for proposals for transaction advisors for an Energy Sector Levy Act (ESLA) backed Bond.

The two entities are also expected to on behalf of Government, who is the “Sponsor” set up a Special Purpose Vehicle (ESLA-SPV) to issue a long-term bonds -The “Energy Bond” or the “Bond”- on the back of ESLA receivables assigned to the SPV, which shall be listed on the Ghana Stock Exchange (GSE).

The ESLA SPV is expected to issue bond(s) to the tune of about GH¢10 billion, being the total estimated legacy debt within the energy sector. A portion of the bond proceeds shall also be used to refinance previously restructured debt due Banks that are currently being repaid with ESLA receivables, as well as the BDC debt due the Banks.

The statement further explained that proceeds from the energy bond issuance will be used to repay the legacy debt of the energy sector SOEs, is in line with government’s strategy as stated in paragraph 805 of the 2017 Budget Statement and Economic Policy of Government, to streamline ESLA flows to resolving the various issues within the energy sector, which have led to intermittent power supply and high tariffs, as well as provide liquidity to the banking sector.

“The Ministry looks forward to a successful ESLA Sponsored Bond issuance as we take steps to resolve the challenges of the energy sector, improve our country risk and debt sustainability outlook, as well as deepen our domestic capital market and promote broader economic growth and development,” the statement added.