Finance Ministry misses GHS 1bn target in 5-year bond sale at 20.75% coupon rate
A total of GHS 862 million has been raised by the Ministry of Finance in the auction of a 5-year maturity dated bond on the domestic capital market.
This was below the Ministry’s GHS 1 bn target for the auction.
Auctioning results made available by the Bank of Ghana [BoG] indicates that, the 5-year bond was auctioned at an interest rate/coupon rate of 20.75% per annum with government accepting all the bids tendered in.
The coupon rate was at the higher end of the initial pricing guidance which was given between 20% and 20.75%.
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This is as a result of the rising inflation, the depreciation of the cedi and uncertainty about the Bank of Ghana’s policy rate which is creating a higher level of uncertainty about the direction of yields of Government of Ghana bonds.
Analysts, however, believe the amount raised was broadly expected given the absence of non-resident investors in the acquisition of the bond.
Presently, domestic interest payments accounts for about 78% of total interest rate payments.
With the prevailing upside risks to domestic interest rates, aggressive control of government spending is very important since the era of cheap money is over.
The senior unsecured bond is set to mature in March 2027.
