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Business News of Monday, 25 September 2017


ITLOS case triggered high interest on Ghana’s Eurobonds

Ghana would have had a much lower yield on its 2015 and 2016 Eurobonds, if its case with Ivory Coast over the maritime boundary was not in existence.

This was revealed by a former Finance Minister Mr Seth Terkper, who told host of Citi Breakfast Show Bernard Avle, that the dispute between the two countries led to the high yields Ghana got on the two bonds.

” …..At the time we are relying on the work the technical team was doing to show that we were confident. To some extent that most of the investors believed and were able to do this bond, it affected the yield and the rate.

Sometimes when you are talking about the rate you wish you had bonds it is a very prime example of a sector that is beyond control which could affect the yields or the price paid for them, this was a real factor”. He said.

The revelation follows the Special Chamber of the International Tribunal of the Law of the Sea(ITLOS)’s ruling on the case over the weekend.

Yield on 2015 & 2016 Eurobonds

Yields on Ghana’s last two bonds, the fourth and fifth Eurobonds were the highest recorded in the history of the country. The yield on the 2015 Eurobond for example was 10.75 percent, against government’s initial target of 8.5 percent while that of 2016 was at 9.25 percent.

The World Bank’s guarantee of 400 million dollars at the time, on the 2015 bond as well as plans by government to set up an infrastructure fund to use proceeds from the country’s Eurobonds played a key role in Ghana getting 10.75 percent interest, which was to be higher.

The high yield at the time was attributed to Ghana’s economic challenges.

Reacting to concerns over the high yield of 10.75 percent in 2015 Mr Seth Terkper had said Ghana remains the only sub-Saharan African country that is able to raise a fifteen year bond at such a yield and asked critics not to compare a 10 year bond to the current 1 billion dollar 15 year Eurobond.

“They were comparing a 15 year bond to a 10 year bond that is comparing apples to oranges. I think they would have served the Ghanaian public well if they have checked. There is a sub – Saharan country that was able to raise a 15 year bond in the first place and was able to roll it at a lower yield and thirdly under the circumstances which the markets find itself now.
Now we are going to use the bond to refinance 90 day bill”.

ITLOS case impact on Eurobonds

But speaking on the Citi Breakfast show the Former Finance Minister Mr Seth Terkper stated that the rates were extremely high due to the dispute between the two countries and the uncertainty at the time of the outcome of the case.

"………The fact that it was so significant that usually before we do what is called the final descriptions, where a series of questions are asked of the Minister of Finance and one of them in 2015 and 2016 in particular was whether the Minister for Finance believed or had any information that suggests that Ghana would not win the case.”

Ghana dragged Ivory Coast to ITLOS in September, 2014 after negotiations with Ivory Coast over the disputed boundary broke down.

ITLOS however on September, 23, 2017 ruled that there had not been any violation on the part of Ghana on Ivory Coast’s maritime boundary.