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 holidays last week, the sale of the debt instruments was extended to Friday, May 6th, 2022.
The interest rate will be paid semi-annually until maturity in 2027 and 2024, respectively.
Until recently, the government paid between 19% and 20.50% for medium-term financial instruments.
However, the sale of debt instruments received mixed responses, indicating additional perceived risks in the economy.
According to the Bank of Ghana‘s trading results, the government obtained ¢601.9 million from the 2-year bond at an interest rate of 21.50 percent, while ¢575.4 million was secured from the 5-year bond at an interest rate of 22.30 percent.
This indicates that investors who owned the maturing 2-year bond redeemed about 1.4 billion of the maturing amount.
There was no objective established for the 5-year bond because it was a new issuance.
However, the government was attempting to rollover $2 billion in the 2-year bond.
Analysts claim that despite the high interest rates on the debt instruments, they were within the price recommendations.
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They did, however, attribute the deficit in bond sales to exceptionally limited market liquidity since the Bank of Ghana’s monetary policies went into effect on April 1st, 2022.
Aside from the restricted liquidity, investors are concerned about the inflation uncertainty and the impact of rising inflation on their actual returns. These investors often choose greater nominal rates to compensate for inflation concerns.
The book runners were Absa, Black Star, CalBank, Databank, Ecobank, Fidelity, GCB, IC Securities, and Stanbic.
SOURCE: myjoyonline
