The Government of Ghana (GoG) issued a 15-year bond on Monday 3rd April 2017, along with a 7-year bond at a combined worth of GHS4.87 million. The bond gained strong interest, as it was oversubscribed by about 56%. From which government accepted 99.9% of total subscription worth GHS3.42 billion at a yield of 19.75%.
Convenants within the bond permit Government to call the bond at specified periods within the bonds tenor. This provision gives Government the opportunity to refinance at a lower rate when interest rates decline in the market.
Issuance of the 15-year bond provides a benchmark pricing matrix for companies to raise long-term funding in the fixed income market. In addition, the new issue will open up trading, improve liquidity and assist in pricing of bonds trading on the secondary market.
We see a bright future for long tenor bond issuance and subsequent trading on the secondary market. This is underpinned by a growing pension fund industry that normally prefers long-dated bonds.
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