Energy bond realises GH¢2.26 billion

The Energy Sector Bond has received GH¢2.260 billion in bids from investors at the close of the issue period on Thursday.

The amount is less than half the total amount of GH¢6 billion the government had targeted to raise to defray the huge energy debt which is crippling the banking sector.

Due to the low patronage, the Ministry of Finance has extended the closing date for the roadshow, which started last Tuesday to today.

Highly placed sources within the transaction circles told the Daily Graphic that the book size for the seven-year bond stood at GH¢1.5 billion, while that of the 10-year bond was GH¢760 million.

The Daily Graphic had earlier picked information that interest in the bond was low for inexplicable reasons, but the source said the “the extension to Friday is due to the reverse enquiry from local and offshore investors who requested additional time to complete their internal credit processes.”

There have been concerns raised about the fact that the apathy being exhibited by the investors is due to the lack of a sovereign guarantee to protect the investors’ fund.

Some have also accused the government and its agents managing the funds of not advertising the bond enough to whip up investor interest.

One anonymous analyst blamed the government for its attitude towards investors who had earlier dealt with the government.

It cited the Ameri deal which the government was bent on reversing for what it claimed to be against the interest of the state.

According to the analyst, the posture of the government was sending a negative signal to the investor community and urged caution in that regard.

Background

The auction of the GH¢6 billion cedi-denominated energy sector bond began last Tuesday as the government sought funds to refinance the huge energy sector debt which has contributed to the unprecedented high levels of non-performing loans (NPLs) on the books of the banks.

Local and offshore investors, made up of local pension fund managers, were briefed on the nature and structure of the bond, which has been described as a better alternative to government papers (Treasury bills) on the market because of its size and risk profile.

The bond, which was issued in two tranches of GH¢2.4 billion and GH¢3.6 billion, had a seven-year and a 10-year tenure, respectively.

The Ghana cedi-denominated bond is listed and traded on the Fixed Income Market of the Ghana Stock Exchange (GSE) under conditions yet to be announced.

E.S.L.A. Plc (unrated), an independent special purpose company established and sponsored by Ghana, acting through the Ministry of Finance, appointed Standard Chartered Bank Ghana Limited and Fidelity Bank Ghana Limited to arrange a series of fixed-income investor meetings prior to the roadshow. Co-managers of the mandate are Temple Investments and GCB Bank.