Economic Analyst with DataBank, Courage Boti has described the coupon rate for government’s 20-year fixed bonds as fairly priced.
He explains that the current market conditions influenced the rates which ranged between 19.85 percent and 20.2 percent for the 162 million cedis bonds.
“I think it is a fairly priced instrument. Largely when you are pricing a new issuance like this, you want to look at the curve that existed and you want to look at the current market conditions. As you analyze the curve, you realized that yes we didn’t have a 20-year bond outstanding, but what was on the market, the longest maturity we had on the local currency front was a sixteen-year bond,” he said in an interview with Citi Business News.
Mr. Boti adds that the coupon rate is within the price range.
“The last issuance in July actually closed at 20 percent. And so if the last 15 years closed at 20 percent, and we are having a 20-year, five years longer closing at 20.2 percent, it tells you it is fairly within the price range. I think it is a fairly priced instrument largely in line with the broad market expectations”.
Ghana’s medium and long-tenured debt securities have been primarily subscribed by foreign investors who have been allowed to participate in such issuance since 2007.
The government last Wednesday opened the book building, after releasing initial pricing guidance for the 20 –year treasury bond through the Ghana Stock Exchange.
The 20-year bonds were issued through Barclays Bank, Databank, Stanbic Bank, Fidelity Bank and IC Securities acting as book-runners for the government.