Govt bonds oversubscribed by 450 percent

The repayment of such short-term borrowing falls due quickly and the government has to find ways of paying them out.

 Although it proposed to raise GH¢400 million in this latest bond issue, the auction recorded inflows of GH¢2.2 billion, translating into 450 per cent oversubscription.

But the government accepted GH¢402 million at a coupon rate (interest rate) of 16.73 per cent.

 According to the Ministry of Finance, about 99 per cent of the bids came from foreign investors and the rest from firms and institutions, commercial banks and individuals within the country.

 The caretaker Minister for Finance and Economic Planning, Dr Kwabena Duffuor,  told a section of the media that “the 450 per cent oversubscription is an indication of investor confidence in Ghana’s economy. The government is committed to ensuring fiscal consolidation for the fifth year running”.

 Last year, the government issued six cedi-denominated bonds, made up of two five-year fixed rate bonds and four three-year fixed rate bonds, all of which were oversubscribed.

While some of the funds were used to finance infrastructural projects, others went into the payment of debts that had fallen due.

Story by Samuel Doe Ablordeppey