The government will pay an additional interest rate for the 5-year and 2-year bonds

The government will pay an interest rate of 22.30% and 21.50% for the 5 and 2 year bonds issued on Friday 6and May 2022.

The sale of debt securities has been extended until Friday, May 6, 2022 to take into account the Labor Day and Eid holidays last week.

The interest rate, which will likely increase the country’s interest payment, will be paid semi-annually, until maturity in 2027 and 2024 respectively.

Until recently, the government paid between 19% and 20.50% for medium-term financial instruments.

However, the sale of debt securities saw mixed subscriptions, signaling other perceived risks in the economy.

According to trading results published by the Bank of Ghana, the government raised ¢601.9 million on the 2-year bond at an interest rate of 21.50%, while ¢575.4 million was raised. obtained on the 5-year bond at an interest rate of 22.30%. .

This means that approximately ¢1.4 billion of the maturing amount has been repaid by investors who held the 2-year bond.

For the 5-year bond, there was no target set since it was a new issue.

However, on the 2-year bond, the government was looking to roll over ¢2 billion.

Analysts say that although the interest rate on debt securities was high, they were within the price forecast.

They, however, attributed the shortfall in the sale of the bond to extremely tight liquidity in the market, since the Bank of Ghana’s monetary measures came into force on April 1, 2022.

In addition to tight liquidity, some investors remain concerned about the uncertainty of inflation and the implications of rising inflation for their real returns. These investors tend to expect higher nominal returns to offset inflation risks.

Absa, Black Star, CalBank, Databank, Ecobank, Fidelity, GCB, IC Securities and Stanbic were the bookrunners.

Stephen V. Lee