The Finance Minister, Ken Ofori-Atta has reiterated that the high participation of foreign investors in Ghana’s recent issue of three billion dollars Eurobond confirms investor confidence in Ghana.
Comparing the 3 billion dollar bond to the last bond of 750 million dollars raised under the erstwhile John Mahama administration, Mr. Ofori-Atta argued that government got a better coupon rate this time compared to what the previous government got, signifying a positive sign at a time Ghana was exiting an IMF programme.
Mr. Ofori-Atta was speaking in parliament on the successful completion of the IMF programme among other recent issues.
“The last Eurobond of the previous government of 750 million dollars was issued in 2016, the order book was 4 billion dollars over five times larger. But this came at a high cost of 9.25 percent for six years,” Mr. Ofori-Atta recalled.
He pointed out that compared to this year’s bond of 7.785 percent for a seven year bond, government has done well in pricing its bonds.
Mr. Ofori-Atta noted that with about 20 percent oversubscription, the international investment community was telling government that it is safe to invest in Ghana.
Cedi appreciation
On the performance of the cedi, Mr. Ofori-Atta stated that even though the cedi suffered some depreciation against the dollar its quick recovery shows that the fall was not due to macroeconomic fundamental.
“It is clearer from the data that the depreciation of the cedi was not due weak economic fundamentals but rather a combination of structural rigidities and apparent speculative behavior of portfolio investors”
He argued that the recovery of the cedi which begun before the inflow of the Eurobond cash demaonstared that the fundamentals were still strong.
Background
The cedi has seen some depreciation from the beginning of the year until the second week of March when the local currency started gaining.
The coming in of the 3 billion dollars Eurobond is also expected to further strengthen the cedi.
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By: Lawrence Segbefia/citibusinessnews.com/Ghana