The Government of Ghana issues a 3-year Ghana Cedi denominated Treasury bond due for maturity in 2023 and also re-opens a bond which was initially issued on 26thAugust 2019 slated to mature on 1st August 2039.
In a recent press statement, the Bank of Ghana indicates that the bonds are unsecured meaning they naturally carry more risk thus, according to analysts some uncertainties continue to remain in the market with investors mindful of the COVID-19 pandemic and other fiscal challenges in the Ghanaian economy.
A ‘bullet’ principal repayment method is to be applied indicating that there is going to be a single payment of the principal on the bonds and “Each Bond shall have a face value of One Ghana Cedi with a minimum bid of GHS50 Thousand and multiples of GHS1 Thousand, thereafter,” the Bank of Ghana mentioned.
The Bank of Ghana also opined that the bond issuance is in accordance with the Governing Law of Ghana and it’s to be “marketed to Resident Investors or Open to Non-Resident Investors” through a listing done on the Ghana Stock Exchange (GSE).
The 3-year bond is going to be issued through a book building format to determine the price at which the initial public offering (IPO) will be offered and the issuance methodology adopted requires that “all successful bids will clear at a single clearing level” and there will be “discretionary allocation at the single clearing level in event of over-subscription”. Aside from the application of the book-building format, bids are accepted on a yield (percentage) basis.
Contrary to this, for the bond which is being reopened, bids are to be accepted on a price basis with “no uniform clearing level-successful bidders will be allocated at the price at which they bid” the Bank of Ghana revealed adding that there will be “partial allocation to bids at the cut-off price at Issuer’s discretion in the event of oversubscription”.
The current amount outstanding on this bond which is supposed to mature in 2039 is GHS162, 131,557 and the coupon rate lingers at 20.20%.
Today, December 15, 2020 marks the release of the Pricing Guidance and the start of procedures regarding the offer period including the pricing, book-build, and allocation methodology.
At 9:00 AM, tomorrow, 16th December, the Bank of Ghana says a “Revised Pricing Guidance” is to be released as “necessary during the Book-build”.
Subsequently, the Final Pricing and Allocation of the 3-year Treasury bond will follow suit on 17th December and involves the release of a “Revised and Final Pricing Guidance” deemed necessary during the Book-build.
“There will be no revised pricing guidance released to the market” for the bond being reopened, the Bank of Ghana alerted.
The Bank of Ghana has cautioned that the “books are expected to close around 3:00 PM on Thursday,” so all bids are to be received before the set time. Also, both bonds have a settlement/ Issue date effective Monday, December 21, 2020.
The Bank of Ghana finally informs the general investing public that the Treasury bond Issuance will be done through Absa, Databank, Fidelity, IC Securities, and Stanbic who will serve as “active joint book-runners for the bond” meaning they are to ensure that transactions are executed as smoothly and efficiently as possible.
