GSE launches Commercial Paper Market to provide short-term financing for businesses
The local bourse has launched the much anticipated Commercial Paper Market aimed at providing short-term financing to businesses.
The Commercial Paper Market seeks to augment the depth and liquidity of Ghana’s securities landscape, ultimately propelling the nation’s economic development.
The new market offers an avenue for private pension funds, keen to explore investment diversification, and companies seeking alternative sources of short-term finance beyond conventional banking channels.
By bridging the gap between investors and companies in need of such financing, the Commercial Paper Market endeavors to usher in a new era of financial flexibility and risk reduction.
The Commercial Paper has a tenure of 270 days and can be issued at a discount to the face value or be issued at an interest rate.
The debt instrument, according to the GSE, can be rolled over partially or wholly.
Businesses eligible to issue a Commercial Paper Market on the GSE must be worth at least GHS 5 million and be able to issue a commercial paper not less than GHS 1 million.
The company will be required to provide pre-tax earnings of three (3) years, it must have no history of default or overdue loans.
The company must also have an investment grade rating issued by a rating agency accredited by the GSE.
The company must also seek two approvals, one from the Securities and Exchange Commission (SEC) and the other from the Ghana Fixed Income Market (GFIM).
Speaking at the launch of the Commercial Paper Market, Managing Director of the GSE, Abena Amoah, noted the launch of the short-term debt instrument is a significant milestone for Ghana’s capital market.
“The Commercial Paper Market is the first regulated short-term debt market in the country and shows innovation in the capital market. The market will provide viable solutions to meet short-term financing needs of businesses,” she remarked.
According to the MD, corporate issuances on the GSE are looking very positive with the GSE facilitating issuances from three companies – Kasapreko, Letshego, and Izwe – this year to the tune of GHS 275m.
Adding that, the GSE is expecting further issuances to the tune of GHS 1bn from companies listed on the GSE this year.
The MD of the GSE in concluding her address at the launch, called on the Government to incentivize investors by reinstating the capital gains tax exemption on investments in equities.
