Finance Minister Seth Terkper has disclosed that Ghana’s 2007 Eurobond is left with 200 million dollars to be refinanced.
The 750 million dollar Eurobond which was Ghana first ever Eurobond was issued at par to yield of 8.5 percent.
The bond will mature by next year and Ghana is expected to pay back.
Speaking at press conference, Mr. Terkper stated that the strategy used to avoid a bullet payment of the bond has provided some financial space for government’s fiscal policies.
According to him, it would have been practically difficult if steps were not taken to set up a Sinking Fund, that will allocate some funds to refinance the bond.
“We have US$200 million approximately on that bond but its fully funded we have put money aside into the Sinking Fund to be Buying Back anytime anybody wants to trade because that was one of the uses of the funds,” he explained.
He stated that the development will also prevent the country from rolling over risks which may finally impact negatively on interest rates, inflation and the debt stock.
“We showed that the combination of the Sinking Fund that we had about 100 million, we showed that the World Bank guaranteed funds were not exhausted and we were ready to add 150 million dollars to it and we showed that the bond itself that were going to be issuing, we could add,” he said, adding that the move has afforded government an opportunity to still have some cash in the fund to Buy Back anytime investors want to trade their shares in the bond.
Terkper defends maiden 10-year bond
Touching on Ghana’s maiden 10 year bond issued at 19 percent recently, Mr. Terkper vehemently defended the cost as a good deal.
According to him, the cost of 19 percent on the bond is more productive since the net effect on Ghana’s debt is far better compared to 5 year domestic bonds issued at over 22 percent.
“When you say 19 is too high what is you context?. Let’s go back to the way we handled our bonds, when we issue Treasury Bills we don’t redeem them, we don’t pay back, hardly until we started using our sovereign bonds to be paying down and extending the tenure. You have five years you don’t have money to pay the loan so you refinance, so assuming you issued at 22, the market realizes you don’t have money to pay back so your refinancing increase to 24 because that is when you also have gold, cocoa and other prices falling,” he argued.