Ghana’s Finance Minister, Seth Terkper has revealed that the $1billion raised by the country’s Eurobond would be used to only refinance the nation’s existing debts which are maturing.
According to him even though the initial plan had been to raise $1.5 billion; with a World Bank guarantee for $1 billion of the amount to be used for debt financing whilst the remaining $500 million is used as a new capital, market conditions in the global market had made the Ministry to go for $1 billion instead.
In accordance with World Bank’s guarantee conditions, the entire $1 billion, which was raised with a $400 million World Bank guarantee, would be used to refinance Ghana existing debts, particularly the 2007 Eurobond, which is set to mature in 2017.
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He however, maintained that since Parliament had approved $1.5 billion, there was still an opportunity to go back to the market; either the domestic bond market or the international market and borrow the extra $500 to cover the deficit.
Mr. Terkper explained that Ghana’s 2015 Eurobond was its fourth, with previous ones issued in 2007 (10 years), 2013 (10 years), and 2014 (10 years) which raised $750 million, $1 billion and $1billion respectively.
The outstanding balance from the previous bonds are: $530,510,000 on the 2007 bond and $1billion each for all the other bonds with maturity dates in 2017, 2023, 2026 and 2030 for the latest issue.
The 2015 issue is the first Eurobond with 15-year tenure, but comes with the highest coupon rate of 10.75 per cent due to the global pressures facing emerging markets.
According to the Minister, global conditions in the world economy had posed major challenges to emerging markets including Ghana.