The 2-year Ghana cedi denominated Treasury bond (Rollover) hits GH¢371.72 million at the latest Government of Ghana Securities auction and is ready for settlement/ Issue today, December 7, 2020, which marks an election day.
This is according to the Bank of Ghana and further indicates that distribution of the bond is to be open to both resident and non-resident investors in accordance with the Governing Law of Ghana.
The government employed a “Book-build” format in issuing the Treasury bond, the Bank of Ghana mentioned adding that the issuance follows the release of an initial pricing guidance through the Ghana Stock Exchange (GSE).
With a bid rate equivalent to its interest rate, ranging from 18percent to 18.5 percent per annum, as well as a “face value of One Ghana Cedi with a minimum bid of GH¢50 Thousand and multiples of GH¢1 Thousand,” the total sales made for the 2-year Treasury bond fell below the GH¢ 650.16 million recorded at last times’ 3-Year Treasury bond sales.
All bids tendered for the 2-year Ghana cedi bond issuance got accepted by government. However, its ‘senior unsecured’ in terms of security status, with a ‘bullet’ principal repayment method, the Bank of Ghana disclosed.
Unsecured bonds naturally carry more risk than secured bond thus, according to analysts even though the pricing remains within the current secondary market conditions, the results proposes that some uncertainties continue to remain in the market with investors mindful of the COVID-19 pandemic and other fiscal challenges in the Ghanaian economy.
Since, majority of the funds are usually used to repay maturing debts, the emergence of the coronavirus pandemic with its damaging effects required that the government keeps accepting all bids for bonds issued to enable it finance its increasing debt.
Last week witnessed the undertaking of procedures regarding the offer period including the pricing, book-build, and allocation methodology adopted which requires that “all successful bids will clear at a single clearing level,” but there will be “discretionary allocation at the single clearing level in event of over-subscription,” the Bank of Ghana alerted.
Also, the issuance methodology further mandated that aside from the application of the book-building format, bids were accepted on a yield (percentage) basis, the Bank of Ghana asserted.
The Bank of Ghana finally informs all and sundry that the December 2020 2-year Ghana cedi denominated Treasury bond (Rollover) Issuance which is set to mature in 2022 will be done through Absa, Databank, Fidelity, IC Securities, and Stanbicwho will serve as “active joint book-runners for the bond” and the general investing public is hereby urged to be guided accordingly.
