Ghana organises roadshow on Eurobond
The Minister of Finance, Mr Seth Terkper, has begun a roadshow in his quest to raise another $1 billion Eurobond to support the country’s development agenda.
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Mr Terkper, who is leading the government delegation to the ongoing IMF/ World Bank Spring meetings in Washington, made a stopover in London for what is described as a ‘non-deal roadshow’ to showcase the country’s growing economic prospects.
The government is rallying investors for a fourth excursion into the international bonds market to raise more funds to support the country’s growing infrastructural needs and also repay part of its maturing debts due in 2017.
The move by the finance minister comes just after the country has sealed a three-year programme with the IMF under which more than $900 million is to be released to bolster renewed credibility in the country’s home-grown policies.
Mr Terkper told the Daily Graphic on the sidelines of the spring meetings that investors were keen to tap into Ghana’s bond for a better yield.
“This is a departure from what we are used to; doing roadshows when the market is ready, but this is a non-deal roadshow to whet the market’s appetite for Ghana’s prospects”, he said, adding that “by this, we are sensitising the market and making slides presentations and telling investors about the true economic situation of the country”, he said.
Transaction advisor
Though the government is yet to complete the prospectus and appoint a transaction advisor for the bond deal, Mr Terkper is upbeat that the medium-term prospects will attract high yield-hungry investors.
The bond deal had already been approved by Parliament and the government hopes to go to the market after the summer holidays.
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The government, in September 2014, raised $1 billion through a Eurobond coupon that is 8.125 per cent lower than what analysts expected.
This was after a similar amount had been raised the previous year in 2013, at a rate of 7.85 per cent, with the first Eurobond in 2007 sold for $750 million, selling at a rate of 8.5 per cent.
“The team will move to New York in the coming days to sensitise investors there to Ghana’s recovery story, which is hinged on the transformation agenda of the government,” Mr Terkper explained.
IMF Okays programme
Already, the IMF has stated that Ghana’s programme with the fund would likely unlock lending from other bilateral institutions.
At a news conference at the spring meetings in Washington, the Managing Director of the IMF, Ms Christine Lagarde said, “our programme with Ghana will clearly have a catalytic effect”.
"When a country has signed a programme, it generally always triggers on the part of other bilateral institutions and bilateral lenders, financing that sometimes had been frozen or locked," she said at the conclusion of a meeting of the IMF's steering committee.
Reasons for hope
The government plans to use potential hydrocarbon resources to stabilise the economy and bolster growth, apart from the IMF package that has begun flowing in.
The country’s new oilfields are scheduled to start production next year since development has passed the halfway stage, according to a source at Tullow, the lead operator.
The offshore Tweneboa, Enyenra and Ntomme (TEN) project, which will have a peak production capacity of 80,000 barrels per day (bpd), is expected to cost close to $5 billion.
It is expected to deliver its first oil in mid-2016, with a plateau production rate of 80,000 barrels of oil per day. Future development of gas resources at TEN is anticipated following the commencement of oil start-up.
Mr Terkper said the Ghanaian government would also continue to use its oil stabilisation fund to manage the volatility of its currency.
The country suffered some economic difficulties as a result of falling commodity prices, rising debt and growing trade and fiscal imbalances and huge overruns that were largely necessitated by oil revenue shortfalls and a huge compensation bill.
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But the finance minister said the country had taken the needed steps to address revenue shortfalls and consolidate debt, both critical measures in addressing the country’s fiscal challenges.
He affirmed the strong medium-term prospects of the economy, pledging the government’s resolve to ensure that they were not derailed by fiscal shocks such as the recent low crude oil prices on the global stage.