An assessment of the Emerging Market Bond Index (EMBI), by Fitch Ratings and JP Morgan, indicate an easy issuance of Ghana’s $3 billion or $5 billion Eurobond issuance should international market conditions prove favourable.
The two institutions indicate that, Ghana and a few Sub-Saharan African (SSA) nations with credit ratings of B with stable outlook seeking to raise funds from the international capital market in 2021, will have little difficulty in doing so as market conditions have improved considerably since the easing of the restrictions brought about by the coronavirus pandemic.
According to Fitch Ratings, Cote d’Ivoire’s (B+/Positive) issuance of a 12-year euro 1 billion Eurobond on 25 November, 2020 confirms that some SSA issuers are able to resume market issuance to meet part of their financing needs next year.
Cote d’Ivoire’s bond was priced at a record-low yield of 5.0 per cent and was still five times oversubscribed.
The report pointed out that sovereign nations including Ghana will follow Cote d’Ivoire in issuing Eurobonds in 2021, as market conditions have eased sharply.
“We expect three sovereigns; South Africa, Namibia and Nigeria] to conduct further issuance to meet funding needs and believe Cote d’Ivoire, Ghana and Kenya will return to the markets in 2021,” said the assessment report by Fitch and JP Morgan.
Cote d’Ivoire’s issuance was the first by an SSA sovereign since the escalation of the pandemic.
“A number of North African and Middle Eastern sub-investment-grade sovereigns have issued debt since the crisis, including Bahrain (B+/Stable), Egypt (B+/Stable) and Oman (BB-/Negative), but SSA issuers have lagged returning to markets after the shock.”
“Pre-pandemic, we had expected Angola (CCC), Benin (B/Stable), Cote d’Ivoire, Gabon (CCC), Ghana (B/Stable), Kenya (B+/Negative), Nigeria (B/Stable) and South Africa (BB-/Negative) to tap international markets in 2020. However, only Gabon and Ghana managed to issue debt before the pandemic shock, in February and March, respectively, after which SSA sovereigns cancelled foreign issuance plans as markets effectively closed,” read parts of the report.
Ghana planning to raise $3-$5 billion early next year
Ghana is seeking to raise between $3-$5 billion from the international capital market next year.
A portion of the amount raised according to the Finance Minister, Ken Ofori-Atta in his presentation of the Expenditure and Advanced Appropriation Budget for Q1 2021, will be used to finance the budget and repay some debts.
