Debate over bond is needless

Investment requires due diligence as the expectation of the investor is to derive maximum returns.
However, any investment that is shrouded in controversy with accusation of lack of transparency will certainly create problems for the investor and the country.

Ghana has had very friendly laws which attract investments and investors have hitherto been very happy investing in the country because of the medium-term prospects of the country.

However, the recent US$2.25 domestic bond, which was issued by the government and the concerns that have been raised by the Minority members in Parliament, could potentially cast a slur on the country’s investment prospects.

The government, on April 3, announced it had been successful in the auction of some US$2.25 billion in four bonds.

The first two bonds, totalling US$1.13 billion, were issued at 15 and seven years period respectively with the same coupon of 19.75 per cent.

In addition, the Ministry of Finance raised the cedi equivalent of US$1.12 billion in five-year and 10-year bonds through a tap-in arrangement.

The Finance Ministry was hoping to use the funds raised to pay short-dated bonds such as the three and five-year bonds that were maturing to enable it to focus more on long-dated bonds.

Despite its success, the Minority in Parliament, led by a former Deputy Finance Minister, Mr Cassiel Ato Forson, alleged that the issuance was done in secrecy, denying other investors the opportunity to participate in the bond.

They further alleged that the transaction was “cooked” to favour a particular investor, Franklin Templeton, and that the transaction did not receive parliamentary approval.

This has, however, been denied by the Finance Ministry, prompting the Minority to petition the United States Securities and Exchange Commission to investigate the matter. Another member of the Minority also petitioned the Commission on Human Rights and Administrative Justice to look into the matter.

Beyond these, the Minority, on May 31, filed a motion in Parliament to compel the Minister of Finance to provide all the documents surrounding the deal to the House.

While the two sides are acting within their constitutional rights, we at the GRAPHIC BUSINESS believe that the inability of the Minority and the government to reach a compromise on the issue could likely dampen the confidence of investors in the country’s future bonds.

The paper is, therefore, calling on the government and the Minority to come to a compromise and place the interest of the nation first.

We are of the view that this controversy is needless and parties must come together to iron out whatever differences there are so that the country’s investment climate is not affected.

The government must also be cautious to conduct proper due diligence in future to ensure that these controversies are minimised or eliminated.

By this, we mean that future bond programmes should be adequately advertised and taken through proper bidding processes, with coupon rate made open to all so that whoever is investing in the country’s prospects will be very clear in his mind about what he is bidding for.