BoG To Issue Domestic Bond

The Bank of Ghana (BoG) is to issue a three-year GH¢630 million ($158 million) bond tomorrow to raise funds to settle maturing debts, Yao Abalo, Head of Treasury at BoG has said. 

The auction, open to offshore investors, is part of the government’s debt restructuring plan, he told Reuters on Monday.

According to Mr. Abalo, the settlement will be on May 26.

A GH¢400 million three-year paper issued last month was undersubscribed with only 168.26 million worth of bids tendered of which the bank accepted GH¢103.37 million at 22.49 per cent yield.

Analysts say tomorrow’s bond is likely to be fully subscribed but at a higher yield, following a 100-basis point policy rate hike by the BoG last week.

“There is appetite for this bond but we expect the yield to go up marginally to reflect the state of the economy,” a local bond market investor told Reuters.

The auction also aims at mobilising liquidity to shore up the local cedi which is down nearly 18 per cent since January, an official at the Finance Ministry said.

Interest rates in Ghana, which started an aid programme with the International Monetary Fund last month, are among the highest in Africa and reflect fiscal challenges facing the economy.