Abena Amoah, the Managing Director of the Ghana Stock Exchange (GSE) has disclosed that the GSE will launch its Commercial Paper Market (CPM) product before the end of the third quarter of this year.
According to the Managing Director of the Ghana Stock Exchange, the move is to diversify the products on the GSE and help promote liquidity on the Accra bourse.
Speaking at a seminar dubbed ‘Developing a Commercial Paper Market in Ghana’ to educate players in the banking and financial sector on the CPM product, Ms Amoah explained that Commercial Paper (CP) is essentially a short-term debt instrument to help companies to raise money with tenure of not more than one year to meet their short financial needs.
The Managing Director noted that the decision to introduce the product is as a result of the high demand by companies and players in the financial sector for such a product.
Ms Amoah indicated that the private pension funds has more than GH¢51 billion assets under management and these funds have to be deployed to accelerate the socio-economic development of the country.
Abena Amoah stated that a private market existed for CP but there was no visibility for the market.
“What we are going to do is an organised CPM with rules about who can participate in the market, what kind of investment the issuer qualifies for the market, rules on documentation and information.”Abena Amoah
The Managing Director of GSE explained that the GSE has currently completed the guidelines and rules on the CPM and is awaiting approval from the Securities and Exchange Commission (SEC) to roll out the product.
There Would be Rating Agencies
Ms Amoah noted that there would be rating agencies which would rate the companies that entered the CPM to assess their financial capacity and determine whether they are credit worthy and capable of paying back the monies they raised.
“The GSE is asking the SEC to grant it a Self-Regulatory Organisation status so that the Ghana Fixed Income Market can regulate the CPM,” the Managing Director of GSE stated.
Abena Amoah stressed that the CP would help companies to raise short-term capital to finance their business operations. “The introduction of the CPM will help companies to raise relatively cheap capital since short-term instruments were less expensive than long-term instruments,” she stated.
The Managing Director of GSE, expressed the hope that the SEC would give approval so the product could be launched before the end of the third quarter of the year.
The Head of Investment Banking of Stanbic, Kobby Bentsi-Enchil, on his part, said the country needs the right foundation for its CPM, stating that there is strong demand for CPM for investors to diversify their investment portfolios.
“This is why a Committee has been set by the GSE and the Committee will ensure that there is investor protection and all the transactions are done in a transparent manner.”Kobby Bentsi-Enchil
Mr Bentsi-Enchill further stated that there is a need to ensure the CP is cost-efficient so that borrowers could borrow at a cost that is effective.
Mr Bentsi-Enchill stressed that it is important for the country to pay attention to Speed up the Market so that a company applying to the exchange to launch their CP could get approval in a short space of time.