December 13, 2012 / 5:36 PM / in 5 years

UPDATE 2-Ghana to refinance Eurobond, eyes rapid growth

* Ghana keen to lower cost of debt as rates fall

* Economic growth seen around 8 percent in 2013 (Adds background, analyst quote)

By Kwasi Kpodo and Richard Valdmanis

ACCRA, Dec 13 (Reuters) - Ghana plans to refinance a $750 million Eurobond next year to benefit from falling interest rates, and may seek to raise extra cash with the new issue, the country’s finance minister said in an interview.

High-growth Ghana - Africa’s second-largest gold miner and the world’s No.2 cocoa grower - aims to consolidate its status as a middle-income nation. A smooth presidential election last week boosted its reputation as a stable democracy.

“Essentially what we are looking at is reissuing another Eurobond to refinance the existing one,” Finance Minister Kwabena Duffuor said.

“It will not necessarily be the same $750 million. It could be more,” he said. “Our expectation is that it will be cheaper and more efficient.”

Ghana has ramped up borrowing in recent years to fund its rapid growth, including through a $3 billion loan facility from China meant to finance energy infrastructure.

It is seen as one of the most attractive African emerging markets after three decades of peace and the start up of oil production in 2010. It is also Africa’s second-largest gold miner and the world’s No. 2 cocoa grower.

The coupon rate on the existing $750 Eurobond was 8.5 percent when it was issued in 2007. The bond is now trading at a yield of less than 5 percent on the secondary market.

“Because of the performance of the economy and our fiscal position, the coupon rate has dropped,” Duffuor said at his office in the capital, Accra. He was unable to detail the timing or the amount for the new Eurobond issue however.

Samir Gadio, an emerging market strategist at Standard Bank in London, said the new Eurobond issue could attract interest from investors with an appetite for risk.

“A new Eurobond issuance in 2013 makes sense given the low global rate environment and supportive liquidity conditions,” he said. “As long as rates in the U.S. remain marginal and there is investor appetite for risky assets, the country should be able to reduce its external funding cost with a new issue.”

Morocco last week launched a heavily-oversubscribed 10-year $1 billion Eurobond and took advantage of robust investor interested to unexpectedly sell another $500 million 30-year bond.


Ghana has projected economic growth next year of around 8 percent, a pace that newly elected president John Dramani Mahama has promised to maintain during his term.

Duffuor said the country could achieve that growth without stepping back from its three years of fiscal consolidation, which helped pull inflation into the single digits from over 20 percent in 2008.

“Next year, 2013, we will continue with the fiscal consolidation which we started in 2009 and we believe it will go along with rapid economic growth. I see no contradiction between the two things,” he said.

“The growth will be buttressed by the oil sector, agriculture expansion and an infrastructure programme, which is progressively expanding,” he said.

Duffuor said a projected increase in oil production from Tullow Oil’s offshore Jubilee field to 120,000 barrels per day next year from around 90,000 bpd now would help.

Aside from being one of Africa’s newest oil exporters, Ghana is also the continent’s second-largest gold miner and the world’s second-biggest grower of cocoa.

Ghana’s rapid economic growth has fired up demand for imports - triggering a nearly 20 percent devaluation of the local currency during the first half of the year.

The cedi has since recovered some ground after the central bank beefed up its purchases of the local unit and increased reserve requirements at banks.

“We put in place some measures that, thank God, are working now,” he said. “The cedi is not only stable, it is appreciating, and we expect that to continue next year.” (Additional reporting by Bate Felix in Dakar; Editing by Ron Askew)

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