Government to pay extra interest rate for 5-year, 2-year bonds
For the 5-year and 2-year bonds issued on Friday, May 6, 2022, the government will pay an interest rate of 22.30 percent and 21.50 percent, respectively.
To meet the Labor Day and Eid vacations last week, the debt instrument sale was prolonged to Friday, May 6th, 2022.
The interest rate, which is expected to rise, will be paid semi-annually until 2027 and 2024, respectively, when the country's interest payment is due.
The government used to pay between 19 percent and 20.50 percent for medium-term financial instruments until recently. The sale of debt instruments, on the other hand, had a mixed response, indicating that the economy faces further dangers.
According to the Bank of Ghana's trading statistics, the government raised $601.9 million from the 2-year bond at a 21.50 percent interest rate, while 575.4 million was raised from the 5-year bond at a 22.30 percent interest rate.
This indicates that investors who owned the maturing 2-year bond redeemed roughly 1.4 billion of the whole amount due.
Because it was a fresh offering, no target was specified for the 5-year bond. The government, on the other hand, was looking to roll over $2 billion in the 2-year bond.
Analysts claim that even though the debt instruments' interest rates were high, they were within the price range.
They blamed the bond's failure to sell due to exceptionally limited market liquidity after the Bank of Ghana's monetary policies took effect on April 1st, 2022.
Aside from the lack of liquidity, investors are also concerned about inflation uncertainty and the impact of rising inflation on actual returns. To compensate for inflation concerns, these investors seek to stay on for higher nominal rates.
The bookrunners were Absa, Black Star, CalBank, Databank, Ecobank, Fidelity, GCB, IC Securities, and Stanbic.
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