Ghana Eurobond Wins Award

Story: Lucy Adoma Yeboah. December 24, 2007
GHANA’s Eurobond issue which successfully raised $750 million on the international capital market in September this year has won two prestigious international awards.
The awards, 2007 Emerging Market Bond of the Year and the Eastern Europe, Middle East and Africa (EEMEA) Bond of the Year, will be presented on January 14, 2008 by the International Financial Review (IFR) at its 13th gala dinner in London, United Kingdom.
The country has also been commended for the able manner in which it presented its case during the transaction by fulfilling all conditions attached to the transaction.
Ghana, which went to the international market in September 27, 2007, for the first time, saw its sovereign bond denominated in the dollar, oversubscribed by over 400 per cent, amounting to US$3.7 billion.
A letter of invitation from the IFR office in London to Ghana’s Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, commended Ghana for its excellent performance during the transaction.
“We want to congratulate you again on this extremely successful transaction and this most prestigious award in recognition of you and Ghana’s team’s vision and relentless efforts”, it stated.
The IFR is said to be the world’s leading source of capital publication on capital market. Published weekly, it provides investment banking decision makers with authoritative information and analysis. It also provides capital market coverage data, analysis and commentary on significant issues across the asset classes such as debt and equity, capital markets, securitisation and syndicated loans and emerging markets.
The award is said to be the industry’s most prestigious, and the award ceremony is widely considered to be the leading event in the global capital markets calendar.
Her Royal Highness, Princess Anne of Great Britain, will be attending in her capacity as President of Save the Children and will also participate in the awards ceremony together with Matthew Davies , the Editor of the IFR.
A statement attached to the invitation letter indicated that by establishing sub-Saharan Africa’s first liquid bench mark outside South Africa, the Republic of Ghana had provided a substantial boost to the continent’s financial markets and fund raising prospects.
It mentioned that 2007 brought several “firsts” for the African continent, adding that Nigerian banks took centre stage earlier on as Guaranty Trust Bank of Nigeria launched inaugural senior and sub-ordinated bonds in January and March.
In addition, Egypt came to the limelight, printing a debut US$1.05 billion local currency-denominated transaction in July which priced inside the domestic curve.
“The Republic of Ghana NR/B+/B+ attracted the most attention, however, securing an outstanding book of US$3.25 billion for September’s debut of US$750 million 10 year Reg 144a Eurobond”, it stressed.
A bond is a debt security in which the authorised issuer (the borrower) owes the holder a debt (lender) and is obliged to repay the principal and interest (the coupon) at a later date, termed maturity.
Eurobond simply means a bond issued in another currency other than in the issuing country’s currency. It is often issued in another country instead of the issuing country. Nations with very high or unpredictable inflation or with unstable exchange rates often find it uneconomical to issue bonds in their own currencies and so are forced to issue bonds denominated in more stable foreign currencies.
Analysts stated that many factors contributed to the over-subscription of Ghana’s bond which included the strong macro-economics performance of the economy and the general favourable outlook for the economy.
They cited cocoa and gold prices, the two main foreign exchange earners for the country, which had seen considerable price appreciation on the international market, hitting an all time record. Cocoa and gold prices are now around $942 and $772 respectively.
Another factor is investors’ appetite for new instruments following the falling of the United States interest rates on a 10-year government bonds to 4.61 per cent as of September 29, 2007.
The government of Ghana has indicated its intention to use the funds in two major areas of the economy, namely energy and transportation.
In an interview in Accra, Mr Baah-Wiredu said the country was able fulfil all the requirements needed for the transaction, adding that all the necessary information was accurately provided, and on time.
He commended all individuals and groups who played roles in that success story. He, however, reiterated the need for continuous hardwork, adding that “there is no need for complacency. All of us have to work hard in the coming years”.