Ghana has postponed a Eurobond sale of up to $1.5 billion it had expected to launch on Friday amid a rise in borrowing costs for emerging market nations, a senior government official said.
Analysts said the delay, following roadshows in London and the United States, was probably a response to the prospect of having to pay higher yields after concerns about China’s economy and a possible U.S. rate rise roiled global markets.
Eurobonds issued by other commodity-exporting African countries have sold off sharply in recent weeks as metals prices have plunged.
Ghana’s planned issuance was mainly to refinance debt. The country is heeding an International Monetary Fund programme to stabilize its economy in the face of a fiscal crisis that includes a debt to GDP ratio around 70 percent.
Senior Ghanaian financial policymakers have concluded a roadshow in London and U.S. cities and are returning to Accra. Officials said the launch could still happen in the near future.
“What it means is that we are not closing the book (launching the Eurobond) today,” said the official, who declined to be named. “But we are still live in the market and could seal a deal anytime we deem fit.”
A finance ministry statement said Ghana continues to consider the bond issue subject to market conditions. Another senior official told Reuters there was significant interest in the bond but the yields were not attractive.
“The reason why the deal is not announced yet, I suspect, is that the government was surprised that the cost of funding was still elevated relative to their expectations,” said a London-based fund manager.
Investors were demanding a high premium despite a World Bank guarantee for the bond of $400 million and the government appeared to be considering cutting the bond to $1 billion or lower to get the desired pricing, the manager said.
The manager said Ghana wanted to pay a 9.5 percent yield for the bond, while a source involved in book running for the launch said the market was demanding closer to 11 percent.
Credit: cnbc Africa
