“This is basically the first time government is releasing the seven year bond. If you look at the current economic situations that we have in terms of the fiscal policy problem, the high wage bill that the country is also facing at the moment and basically the macroeconomic challenges, the situation [is] not convincing as to how much the government will be looking for,” Ampah, the head of research at Gold Coast Securities, told CNBC Africa on Wednesday.
In a bid to extend the yield curve on government debt, Ghana will offer its first seven year bonds with two second half sales. The first leg will see the sale of 100 million cedi’s in August while another 100 million cedi’s will be sold in November. Ghana has offered the longer-dated bonds to boost debt trading and to borrow over longer terms.
According to the calendar for bond issuance released by the Bank of Ghana, one should anticipate pressure on the short end of the market as well as long term interest rates but Ampah disagrees.
“The market is calm, if you look at the bond issues within the year, which has been highly oversubscribed, it tell you that the people of Ghana and the investors all over the country are really expectant long-term in terms of the bond issues,” he said.
“Looking at the fact that currently the government is buoying the local market at around 23 per cent, this bond might be between eight to 10 per cent because if you look at the local 91-day Bill which is going above 23 per cent, it makes it quite dicey.”