IFC Obtains Consent for Local-Currency Bond Program Supporting Ghana’s Capital Markets

IFC, a member of the World Bank Group, has obtained consent from the Securities and Exchange Commission-Ghana and the Ghana Stock Exchange to regularly issue cedi-denominated bonds in Ghana. The consent enables IFC to issue Cedi bonds when market opportunities align with funding needs, supporting local capital markets and increasing access to local-currency finance for the private sector.
The bonds will be issued under the IFC Pan-African Domestic Medium-Term Note Programme, launched in May 2012 to facilitate regular bond issuances by IFC in the region. The program currently includes Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda, and Zambia.

Source:GSE

GOV’T OF GHANA TO ISSUE GH¢400 MILLION 3-YEAR FIXED RATE BOND TODAY; READ TERMS

TERMS 
Issuer: Government of Ghana
Purpose: For Government budget support and to rollover maturing debt
Amount: GH¢400 million
Issue Method: Through an auction to be held on 30th May, 2013
Price: The instrument shall be issued at par.
Denomination: Each Bond shall have a face value of one Ghana cedi.
Minimum Bid: GH¢50,000 and multiples of GH¢1,000 thereafter.
Coupon: To be determined at the auction to be held on 30th May, 2013.

Interest Payment:

Semi-annually from the Issue Date, in December and June.

The amount of interest paid on every coupon payment date 

shall be equal to the principal amount at the coupon rate for half-year. 

Withholding Tax: The Internal Revenue Act 2000 requires the Bank to withhold tax in respect of interest payments to resident corporations holding Bonds on their own account at the rate of 10% of the gross amount of the payment. Interest paid to a non-resident holder (individual or institution) on Bonds issued by the Government of Ghana is exempt from tax.
Application Methods: Bids may be made on either a competitive or noncompetitive basis through Primary Dealers only. Primary Dealers may also submit bids on their own behalf. Bids received will not be revocable.
Participation: The 3-year Fixed Rate Bond shall be available to both
resident and non-resident investors.
Closing Date: Bids must be electronically delivered to the Central Securities Depository Auction Module not later than 1.30 pm on Thursday, 30th May, 2013

Click here to Download the Full Prospectus 

Looking at the GH 2012 Budget, the Bond way.

The 2012 Budget with the theme “Infrastructural Development for Accelerated Growth and Job Creation” was described by the Majority in Parliament as the best ever but the Minority said it was a repetition of the past budget. The Minister for Finance and Economic Planning, Dr. Kwabena Duffuor outlined in his speech, the plans for the Bond Market and that was what caught my attention.

Over the years, the capital market has been growing slowly and highly dominated by activities in the stock market. The bond market on the other hand is dominated by the Government bonds with very few corporate bonds. In order to ensure accelerated growth as predicted by the budget, the government plans to deepen the bond market. To ensure long term debt instruments, the government of Ghana would be issuing a 7-year and 10-year fixed rate bond next year. In addition, the government will set up a National Bond Market Committee in 2012 to undertake the tasks. Dr. Kwabena Duffour mentioned that, this Committee would be tasked to first of all, identify the constraints in the development of corporate bond market. Moreover, it would study and recommend legal, institutional and process changes needed to accelerate the development of a corporate bond market.

 The Minister further outlined that; this committee would monitor the performance of the government bond market and to improve its effectiveness as an anchor for the corporate bond market. In regards of deepening the bond market, this committee would finally assist the private sector to access the bond market by proposing appropriate financial/technical assistance mechanisms.

This move by the Government for the 2012 fiscal year is good for the bond market and the capital market as a whole.

We hope to see it manifest. Else………………….