Government has initiated processes to rollover maturing two year treasury bonds this month, which are expected to mature in 2021.
This is according to announcement made by the Bank of Ghana (BoG) on Tuesday, March 5, 2019.
According to the Ministry of Finance issuance calendar, the bond value to be issued for this month is GHc 400 million. In total, the government is expected to issue GHc1,800 million during the first quarter of 2019, with the issue of GHc1, 000 million in January, GHc400 billion in February.
The bonds will be issued with each having a face value of GHc1, with a minimum subscription of GHc 50,000 and multiples of GHc 1,000 thereafter. The offer will be open to both local and foreign investors.
The two-year notes would be issued through Barclays Bank, Databank, Stanbic Bank, Fidelity Bank and IC Securities acting as book runners for government.
Books were closed midday on Thursday, with the final pricing and allocation determined.
Successful bids will be cleared at a single clearing level. However in the event of oversubscription, there will be a discretionary allocation at the single clearing level.
Per the issuance calendar of the Ministry, government aims to build benchmark bonds through the issuance of the different instruments, including the 2-Year Note which will be issued once a month through the book-building method.
Although the Bank of Ghana cut its benchmark Monetary Policy Rate by 100 basis points in January this year to 16 percent the yields on medium to long term issuances in which foreign investors are allowed to participate –those with tenors of two years or more – have been allowed to rise over the past one year in an effort to keep those investors interested. Rising interest rates in the western hemisphere have persuaded foreign investors to transfer their portfolio investments from cedi denominated Government of Ghana bonds to dollar and euro denominated bonds and this is a major reason why the cedi has depreciated significantly since the second quarter of 2018.
Medium-Term Debt Management Strategy
The 2019 debt strategy, which is expected to be a continuation of the strategy implemented in 2018, government would issue an annual borrowing and recovery plan for 2019 in line with section 60 (5) of the Public Financial Management (PFM) Law.