Government targets GH¢1 billion in 5-Year bond issuance

Government has announced the issuance of a five-year bond, maturing in 2025 with which it aims to raise GH¢1 billion.

This process for the issuance of the bonds will start today, with the opening of the book-build. This follows release of an initial pricing guidance for the issuance of the bonds through the Ghana Stock Exchange.

This is according to an announcement made by the Bank of Ghana on Monday, March 16, 2020.

Per the government’s debt issuance calendar for the first quarter, an amount of GH¢7,237.87 million is expected to be issued in March, 2020, although most of this is to refinance maturing debt. This week’s issuance is the only one of five year bonds in March.

Each bond to be issued shall have a face value of GH¢1, with a minimum subscription of GH¢50,000 and multiples of GH¢1,000 thereafter. The offer will be opened to both local and foreign investors.

Books are expected to be closed on Thursday afternoon, with the final pricing and allocation determined.

Successful bids will be cleared at a single clearing level. However, in the event of oversubscription, there will be a discretionary allocation at the single clearing level. Investors are expected to be settled and issued with the bonds on Monday, March 23, 2020.

In view of this, successful bidders will be allocated at the price at which they bid, whereas partial allocations will be made to bids at the cut-off price at the issuer’s discretion in the event of oversubscription.

Per its issuance calendar, Government aims to build benchmark bonds through the issuance of the different instruments, including the Five-Year bond through the book-building method.

The Five-year bonds would be issued through Absa Bank, Databank, Stanbic Bank, Fidelity Bank and IC Securities acting as book runners for government.

Government Debt Strategy

The 2020 debt strategy focuses on an appropriate financing mix to mitigate the costs and risks to achieve the desired composition of the public debt portfolio with respect to borrowing from external and domestic sources.

The financing strategy for 2020 proposes issuances of Government securities on the domestic market and creation of cash buffers on top of the programmed net domestic financing for active liability management and cash management purposes.