Local bond market to be expanded

BY: Samuel K. Obour

The government is to expand the local bond market in order to raise internally generated funds to finance long-term development projects in the country.

Most of these bonds will be listed on the Ghana Stock Exchange (GSE), to give investors the opportunity to exit at any time of their choice.

At a stake holders meeting in Accra, the Minister of Finance and Economic Planning, Mr Seth Terkper, who gave more details on the seven-year fixed rated bonds said it was  time to develop the local bond market  to raise capital  to finance medium to long-term development projects.

At the meeting were the two deputy ministers, pension fund managers, investment bankers, fund managers of the Bank of Ghana and the Ghana Stock Exchange.

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The GH¢100 million seven-year fixed rate bond  will be made available on the market on August 22, 2013 and the funds raised will be used  for debt restructuring, as a benchmark instrument and to finance  capital projects provided for in the 2013 budget  statement.

Mr Terkper said the government would now be moving towards the long-dated securities as against short dated securities which did help the economy to grow.

Currently on the market are three and five-year bonds. The short-dated securities are the 91-day treasury bill, the 182-day bill. With the medium-term securities we have the one and two-year notes.

The three-year fixed -rate bond was issued in June, 2013, while the five year fixed bond was issued in August, 2012.

A deputy minister of Finance and economic planning, Mr Ricketts Hagan said moving to the long end of the market would allow for  more liquidity in the market and therefore, called on pension fund, managers as well as  investment fund managers to take interest in these funds.

He said fund managers had the capacity to strengthen the capital market, adding that the government would be issuing more bonds for specific projects when the need arose.

He thus called on corporate institutions to come to the market to issue bonds instead of going to raise short-term funds for long-term projects.

By Lloyd Evans/Daily Graphic/Ghana