Ghana Misses $816 Million Bond Target After Extended Bidding


By Moses Mozart Dzawu

  • West African nation sells 10-year debt at 19.5% yield
  • Debt sold through SPV, wasn’t backed by sovereign guarantee

Ghana missed its target to sell 3.6 billion cedis ($816 million) of non-sovereign bonds to settle the debt of energy utilities as demand for the securities fell short even after the offer was extended by a week.

The West African nation placed 2.3 billion cedis of the 10-year bonds at 19.5 percent after receiving 2.8 billion cedis in bids demanding a yield of as much as 20 percent, joint deal advisers Fidelity Bank Ghana and the local unit of Standard Chartered Plc said in an emailed statement. The debt was offered separately to a tender for 2.4 billion cedis of seven-year securities that were fully subscribed on Oct. 27, when the bookrunners extended the sale for the 10-year bonds.

The government wasn’t prepared to pay more to sell the debt, Sam Aidoo, head of treasury at Fidelity, said by phone. “We will come back to issue the rest any time market conditions are ripe,” he said. The sale is part of a 10 billion-cedis issuance program.

The bonds were sold through a special-purpose vehicle that will be funded with the proceeds of energy-sector levies.

Five major energy utilities in Ghana had 10.8 billion cedis of payable loans at the end of June last year, according to the International Monetary Fund. The 10-month old government of President Nana Akufo-Addo sold the bonds after vowing to boost banks’ ability to lend and restructure the debt-laden energy sector.

Future issuance will continue until all the sector’s legacy debts have been settled, E.S.L.A. Plc, as the special-purpose vehicle is known, said in an emailed statement.

“Because it was not considered a sovereign bond by a lot of financial institutions, some people didn’t buy,” Michael Nana Sarfo, chief executive officer of Bora Capital Advisors Ltd. in the capital, Accra, said by phone. “They can always come back to raise the rest.”


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