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NDC Lied Over $2.3bn Bond
 
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21-Apr-2017  
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The Ministry of Finance says its attention has been drawn to a statement issued by the Minority in Parliament, which seeks to cast negative aspersions on the recent GH¢9.7 billion (US$2.25 billion) domestic bond issue by the Government of Ghana.

Reacting to the report, the ministry described the statement as unfortunate, especially coming from Cassiel Ato Forson, a former deputy finance minister, who knows the workings and processes for the issuance of domestic bonds.

The ministry has therefore called on him to stop making such “baseless allegations.”

Minority’s Claims

Just after news of the bond issue broke, the minority said that the issuance was shrouded in secrecy and that other investors were denied the opportunity to participate in the transaction.

The minority NDC also alleged that the transaction was “cooked” to favour a particular investor –  Franklin Templeton (FT) – just because a director of one of the funds FT managed knows the finance minister.

Additionally, it said the transaction should have received parliamentary approval because it technically should be considered to be a dollar-denominated sovereign bond issue due to the level of foreign investor participation, and that in its view that amounted to a private placement.

NDC’s Track Record

The ministry recalled that the Mahama-led NDC administration on November 30, 2015 welcomed Franklin Templeton (FT) to participate in GoG’s 5-year bond issue at a coupon rate of 24 percent.

Also, on June 27, 2016, the same NDC government engaged Frank Templeton in another GoG 5-year bond at a coupon rate of 24.5 percent.

The same administration, on November 2, 2016, wooed Franklin Templeton into GoG’s 10-year bond at a coupon rate of 19 percent, and this was just before the New Patriotic Party (NPP) found a GH¢7 billion hole in government’s commitments under the NDC.

It stated that Frank Templeton participated in another bond issue, proceeds of which were to be used to pay off maturing obligations incurred by the same “smart borrowing” NDC government and extend the maturities to the long term.

Reaction

The ministry explained that the issuance of the current bond was not shrouded in secrecy nor “cooked” for any particular investor.

“The bookrunners, (Barclays, Stanbic and SAS), on behalf of the ministry of finance, have been mandated since 2015 to issue these domestic bonds on a regular basis as per the debt issuance calendar which the ministry of finance (MoF) puts out every quarter.

“Also the book runners announce and publish every impending bond issue to the market the week of issue and provide price guidance to the market. This particular bond issue was no different and was done in conformity with the established process. It was announced by the Book Runners to the market on March 30, via email and same published on MoF and Bank of Ghana (BoG) websites with settlement on April 3.

“FT was not the only participant, there were over 25 other buyers, including other foreign entities, who all brought in dollars to convert to cedis to buy the bonds.”

Tradition Goes On

“The conventional processes for the issue of bonds using the book building approach were adhered to in this particular issuance. It is our understanding that the said investor engaged various market participants and other key institutions, including the IMF, before deciding to participate in the bonds. It is worth noting that local investors also participated.

“The said investor participated in the issuance in the manner they have always done since 2006 through their local Primary Dealer, Barclays Bank, and their local custodians, Standard Chartered Bank and Stanbic Bank.

“To have obtained preferential treatment, all the above mentioned institutions would have had to conspire to do so, a situation which is unfathomable.  The investor in question, FT, has held Government of Ghana bonds of up to $2 billion prior to this transaction. Indeed, FT has been buying and investing in government bonds since 2006.”

Parliamentary Approval

“This issuance, like all other domestic bonds issued under this bond programme since 2015, did not require parliamentary approval.

“Approval was given under the initial application to Parliament in the 2015 Budget Statement and Economic Policy document to run such a bond issuance programme.  The ministry has the mandate to fund the deficit as contained in the budget approved by Parliament through the issuance of debt instruments and to manage the countries debt stock.”

Impact Of Transaction

According to the ministry, “The issuance brought in significant amount of foreign currency, which was converted into cedis to purchase the bond, helping to strengthen the value of the cedi and providing the much-needed respite for the citizens of Ghana.

“The transaction would also lengthen the maturity periods of government debts, thereby reducing the short term redemption and rollover pressures on government.

“The proceeds from the bond issue are to be used for liability management and for the re-profiling of our domestic debt stock by repaying more expensive short-term debt as it matures, and as such it shall not add to the total debt stock of the nation.”
 
 
 
Source: Daily Guide
 
 

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COMMENTS




Name: ATO FORSON AND HIS BOSS SETH TERPKER ARE JUST DOUBLE ENTRY BOOKEEPERS NOTHING MORE HENCE GHANA SHATTERED ECONOMY RUN BY THE TWO
BAM, DR BAWUMIA HAS TOLD THEM THEY ARE ***barred word*** THAT IS WHY GHANA'S ECONOMY RUN BY TERPKPER AND ATO FORSON, TWO DOUBLE ENTRY BOOKKEEPERS IS IN THE GUTTER, TO BE RESCUED BY DR BAWUMIA, OSAFO MARFO AND KEN OFORI ATTA. THESE ***barred word*** ATO FORSON WILL NOT SHUT HIS ***barred word*** MOUTH. HIS ONW IGNORANCE WILL SHUT HIS BIG MOUTH FOR HIM.
 
Name: OHENEBA
Indeed Vice President has said everything. NDC members don't have the men to run the economy and what they were not able to do in 8 years. NPP have done it in 100 days they are ***barred word*** of NPP. Eye Asem. Who did he Ato Forson think he is. when it comes to academic and working experience can he match that of any of the economic team in NPP. He should better shout up and stop disgracing himself and his party from hopping from one station to another.
 
Name: Ali Osman
This Cassiel Ato Forson guy should jus shuttup. Our party is sufering and see some ***barred word*** aligation he has made. How will dis help our party.
 
Name: Kofi Ofori Dua from Koforidua
If this is the ***barred word*** of opposition the NDC will offer then they will stay in opposition for a long time. Why at all is Ato Forson, this uneducated accountant the one speaking for the NDC party on finance. Where are the heavyweights like Kwesi Botchway and Kwabena Dufuor...ahhh!!
 
Name: Okutey Klutey from Klottey Korley
Ato Forson, must stop wasting our ears and go back to school. He doesnt even understand Accounting, let alone international economics. Franklin Templeton can on several occasions buy bonds under NDC at 24% and it is normal but when he buys Bonds under NPP it is a crime. And he was once a Deputy Minister of Finance? No wonder Ghana is where it is today
 
Name: Okutey Klutey from Klottey Korle
Ato Forson is just a dumb little unqualified Accountant without ACCA. He doesnt even know how Bonds are issued. The Ministry of Finance doesnt directly get involved. It is done through the book-keepers (Stanchart, Barclays and Stanbic). Is Ato Forson saying that all these three banks conspired to favor Franklin Templeton. So they also conspired in all the other bonds in the NDC administration? This is the weakest opposition Ghana has had since 1992!
 



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