3-year bond rolled-over attracts yield of 25%
Ghana Government will have to pay as high as 25 percent yield or cost for the 3-year bond which was rolled-over, last week Friday, May 20th, 2022.
The Bank of Ghana’s data indicates, it secured GH¢470.4 million for the debt instrument, about 76% less than the targeted amount.
Despite the coupon rate within the pricing guidance, the financial market has become really expensive due to the liquidity squeeze and prevailing inflation uncertainty.
This is manifested in the amount of money raised by the government, which significantly fell short of the target.
On the secondary market, it appears more investors are considering selling their bonds or debt instruments rather than buying the financial instruments.
This has made it costly to issue new bonds, hence the high yield-to-maturity, which could impact on government financing.
Per the terms, government is expected to pay interest on the bonds semi-annually till maturity where it will pay off the principal if it does not rollover.
The bond had a minimum bid of ¢50,000 and multiples of ¢1,000 thereafter.
Absa, Black Star, CalBank, Databank, Ecobank, Fidelity, GCB, IC Securities and Stanbic Bank were the book runners.
Government paid extra interest rate for the 5-year and 2-year bonds issued earlier in the month.
It paid an interest of 22.30% and 21.50% for the 5-year and 2-year bonds issued on Friday, 6th May, 2022.
The interest rate, which will probably increase the country’s interest payment will be paid semi-annually, until maturity in 2027 and 2024 respectively.
Until recently, government was paying between 19% and 20.50% for medium term financial instruments.