The over-subscription by five times of the country’s US$ 3 billion Eurobond represents a buoyant economy and huge confidence in Ghana’s medium- to long-term economic growth prospects, especially, given the wider turbulence in the international capital markets due to the ongoing Coronavirus epidemic.
According to Finance Minister Ken Ofori-Atta, who led Ghana’s team to the global markets, the lower rates reflected reduced risk premium demanded by the capital markets as a result of the consistently improving economic conditions.
The global capital markets on Tuesday, 4 February 2020 reposed immense confidence in the Ghanaian economy by hugely oversubscribing to the Eurobond at very low rates comparatively.
While Ghana went to the markets to raise US$ 3 billion, investors responded with a US$ 15-billion offer.
Market watchers were initially worried that Ghana may achieve little success in trading the new bonds at rates cheaper than the 7.88% and 8.13% gotten for the 7 and 12-year bonds in 2018.
The West African country further surprised market watchers by pulling off 6.375% and 7.875% coupon rates for the 7 and 15-year bonds, respectively.
Additionally, Ghana sold a 41-year bond at a coupon of 8.875%, the longest-dated bond for an African country.
In 2019, the country sold a 31-year bond at 8.95%.
Earlier in the week, Ghana’s currency had been adjudged the best-performing currency while its central bank had also been adjudged the best-performing African central bank.
A week earlier, global rating agency, Moody’s, had reviewed Ghana’s outlook from stable to positive, coinciding with the appreciation of the cedi within the first quarter of 2020.
The new managers of the Ghanaian economy, who took over in 2017, say the proceeds will mostly be injected into infrastructure, energy and initiatives that deliver more growth, jobs and incomes to the Ghanaian people.
The US$3-billion is Ghana’s 8th Eurobond issuance.
In the last election year, 2016, Ghana was forced to take a coupon rate of 9.25% for a similar 7-year bond.