* Cancelled to avoid further spike in yields -Analysts
* Ghana also put hold on planned 2014 $1 bln Eurobond
(Adds quotes, details)
By Kwasi Kpodo
ACCRA, March 21 Ghana has cancelled plans to
issue a 5-year domestic bond worth 300 million cedis ($114
million) this month, the central bank said on Friday, a move
analysts said was to avoid a further spike in already high
Central bank treasury head Yaw Abalo told Reuters the
planned auction, open to offshore investors, had been called off
but he did not provide a reason.
Abalo said Ghana's finance ministry had made the decision
not to go ahead with the auction. It follows on the heels of the
government's decision earlier this week to put on hold plans to
issue a $1 billion Eurobond in 2014, to avoid paying a higher
The cancellations could put a further strain on the
government's budget which is already strangled by a high wage
bill, analysts say.
The cocoa, gold and oil exporter announced plans to issue a
series of short- and medium-term debt as part of the
government's debt restructuring. They included a 5-year bond
slated for this month and a 7-year bond auction in May.
Yields on government debt have been on the rise since
January. The rate for Bank of Ghana's benchmark 91-day bill rose
to 23.1678 percent last Friday, from 22.8927 percent at the
Yields on Ghana's 3-year bond were trading at
around 24 percent on Friday, according to Reuters data. In
comparison, the yield on Kenya's three-year bond is
around 10.9 percent. Kenya is set to go ahead with a Eurobond
Analysts said Ghana's high rates reflect pressures on its
public finances, which have deterred foreign investors from its
debt. The cancellation of the 5-year auction was expected and
meant the government was becoming uncomfortable with the level
of interest rates, they said.
"Clearly, the government is now wary of high interest
payments. The market now has to determine if longer-term yields
have reached their peak," a trader at an Accra-based bank said,
projecting that the 5-year issue would have attracted not less
than a 27 percent yield.
The last 5-year bond auctioned in September attracted a
19.04 percent yield.
Ghana's GDP growth shot up to 14.8 percent in 2011, the
first full year of oil production, and the country is seen as
one of Africa's dynamos due to its economy and stable democracy.
But it has missed a series of fiscal targets in the past
year and growth has been hampered by a fall in gold prices, an
energy crisis and signs that a government decision to slash
subsidies has hurt consumer spending.
The IMF estimates the economy grew 5.5 percent last year,
below the government's estimate of 7.4 percent.
(Editing by Bate Felix and Susan Fenton)