Ghana targets US$10bil century bond sale by end of year

ACCRA: Ghana’s Finance Minister Ken OforiAtta said the country is preparing to sell US$5bil to US$10bil in century bonds by the end of the year at a time when rising US rates are making investors wary of emerging-market debt.

In what will be the world’s biggest sovereign issuance of 100-year securities and the first by an African country should the deal proceed, Ghana is planning to raise the debt as the first tranche of a US$50bil bond, OforiAtta said in an interview on Tuesday in the capital, Accra. The US$50bil will be raised “in bits” through a shelf offering, which allows issuers to a register a security without selling the entire issue at once, said Ofori-Atta.

The sale will help Ghana to pay off existing debt, build factories and overcome an estimated shortfall of US$7bil in annual infrastructure spending, said Ofori-Atta. More detail about the bond will be made public when he presents the country’s budget for 2019 to lawmakers on Nov. 15, said Ofori-Atta.

Ghana’s issuance plan comes at a time when emerging-market dollar-bond sales are dwindling as rising US rates dampen investor appetite for high-yielding assets.

Average yields on emerging-market dollar debt have climbed almost 100 basis points since April amid a sell-off sparked by crises in Argentina and Turkey, according to Bloomberg indexes. Only China, Argentina and Mexico have previously issued 100-year dollar debt, of which Mexico’s US$2.7bil deal in October 2010 was the biggest.

“It sounds optimistic,” Kieran Curtis, a money manager in London at Aberdeen Standard Investments, which owns Ghanaian bonds, said by phone. “It’s difficult to believe there is US$10bil of demand out there. This would be outside what you’d expect for their financing needs.” Yields on Ghana’s 2049 dollar bonds rose three basis points to 8.63% at 6.37pm in London on Tuesday, the most in a week. An issuance by year-end will be Ghana’s second sale of Eurobonds in 2018 after raising US$2 bil in 10- and 30-year securities in May.