Govt set to issue local bond
The government has signalled its intent to return to the domestic bond market, providing fresh details on the structure, issuance process and trading of the securities under its new Treasury Bond programme.
Although documents sighted by the Daily Graphic did not state the exact date of fresh bond issuance, the development forms part of efforts to reestablish a stable domestic borrowing programme following the country’s recent debt restructuring, which is expected to rebuild investor confidence and deepen Ghana’s domestic debt market.
The brief by the Finance Ministry released yesterday further indicated that proceeds from the bond issuance would be used to provide budgetary support, reinforcing government financing needs.
It also reaffirmed its commitment to transparent communication with investors, noting that further details, including auction dates, tenors and issuance sizes, would be announced in due course.
According to the brief, under the programme, the government would issue senior unsecured treasury bonds denominated in Ghana cedis, with specific tenors and issue sizes to be announced ahead of each auction.
Also, investors would be required to submit a minimum bid of GH¢50,000, with additional investments in multiples of GH¢1,000.
The coupon rate would be determined through an auction process, while interest would be paid on a semi-annual basis, the document indicates.
It added that the bonds were expected to be redeemed through a bullet repayment at maturity, unless otherwise specified in future issuance documents.
The bonds will be issued via an auction using a book-building format, where bids may be submitted based on yield or price.
According to the terms, successful bids would be cleared at a single clearing level for new issuances, while reopened bonds (re-taps) would be allocated at the accepted price.
The Ministry of Finance added that it would retain the discretion to allocate bonds in cases of oversubscription.
The brief emphasised that settlement would be conducted electronically through the Central Securities Depository (CSD), with all securities issued in dematerialised, book-entry form, noting that no physical certificates will be provided.
It added that once issued, the bonds would be listed and traded on the Ghana Fixed Income Market (GFIM) of the Ghana Stock Exchange (GSE), allowing for secondary market activity among investors.
Market players
The MoF said investors could participate in the auctions through approved Bond Market Specialists, including Absa Bank Ghana LTD; CalBank PLC; Fincap Securities LTD; GCB Bank PLC; One Africa Securities LTD, and Stanbic Bank Ghana LTD.
It warned that bids must comply with the established guidelines for primary dealers and bond market specialists.
Rationale
The government’s re-entry into the domestic bonds market is to re-establish a domestic funding programme, support liquidity management and refinance maturing obligations.
It would also be used to rebuild a sovereign yield curve and provide investment opportunities and restore market confidence for retail and institutional investors, including banks, pension funds, insurance companies and asset managers.
