Ghana’s government will resume domestic bond sales in the second half by reopening existing medium-term issues, the finance minister said, following a two-year hiatus in the wake of its debt restructuring.
The West African gold and cocoa producer is emerging from a debt default, which involved an overhaul of external and local government debt and handing haircuts to investors. That effectively locked the government out of the market for longer-term debt and it had to rely on short-term Treasury bills to raise funds locally.
The financing of the 2025 budget will involve a gradual re-entry into the bond market through the reopening of medium-term instruments.
— Cassiel Ato Forson, Ghana's finance minister
“The financing of the 2025 budget will involve a gradual re-entry into the bond market through the reopening of medium-term instruments,” Cassiel Ato Forson told parliament during a midyear budget review late on Thursday.
Forson also signed a bilateral deal with France on Friday to restructure €87.7m (R1.8bn) of debts. France is the co-chair of the official creditor committee for Ghana, which struck the broader restructuring deal with its bilateral creditors for $5.4bn (R96.1bn) worth of loans in January 2024.
The terms of that broader deal were formalised in January through a memorandum of understanding between Ghana and all the 25 participating countries and have since been ratified in parliament. Ghana has yet to complete bilateral deals with other creditor countries.
Forson said the government would start selecting new bookrunners from early August for the new bond sales, with a focus on banks and investment dealers that could help boost market distribution and advise on pricing and structuring. The government has set up a dollar-denominated sinking fund and another in the local cedi currency, to meet debt repayments in the coming years, Forson said.
“Beginning August 2025, the ministry of finance will commence the building of cash buffers to support the repayment of Ghana’s domestic debt service obligations ... which will fall due in 2027 and 2028,” he said.
The dollar sinking fund will target international bond redemptions, he said.
Said Boakye, executive director of the Accra-based Institute of Fiscal Studies, said the government should be careful not to over-borrow or exceed the fiscal deficit target.
“The Treasury bill market has been under-subscribed in recent weeks so if the government wants to return to the bond market to raise money for the shortfall then that is fine, but if it is an avenue to borrow then they need to be cautious in order not to sacrifice fiscal discipline,” he said.
Additionally, due to the painful local debt restructuring, investors have previously warned that the government could struggle to attract buyers when it next tries to tap local markets for longer-term borrowings.
Reuters
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