Ghana Preparing $1.4 Billion Bond Sale to Clear Energy Debt

ACCRA (Capital Markets in Africa) – Ghana will hold roadshows in the U.S. and London next week to sell 6 billion cedis ($1.4 billion) in local-currency debt to clear arrears owed to banks by state-owned electricity and petroleum utilities, according to Finance Minister Ken Ofori-Atta.

The sale is the first tranche of a plan to sell as much as 10 billion cedis in bonds through a special-purpose vehicle and backed by a tax on the sale of petroleum products, Ofori-Atta said by phone from Washington on Thursday. The debt will carry a maturity of no longer than 10 years, he said.

“We will do the first tranche, size up the market and then come back,” Ofori-Atta said. “You don’t necessarily need to do all the 10 billion cedis right now.”

The roadshows will take place next week in Washington, New York, Boston and London, pending approval for the sale by the country’s Securities and Exchange Commission, he said.

Ghana is selling the debt, which will not be backed by a sovereign guarantee, to clear arrears owed to banks by state-owned electricity and petroleum utilities. The 10-month old government of President Nana Akufo-Addo has vowed to boost banks’ ability to lend and strengthen the financial industry as part of an agreement under a International Monetary Fund extended-credit facility program with the West African nation.

Deal Advisers
Ghana appointed the local unit of Standard Chartered Plc and Accra-based Fidelity Bank Ltd. in June as advisers for the sale.

The stock of non-performing loans at banks was 8 billion cedis on June 30, according to Bank of Ghana data. The three major power utilities, Electricity Company of Ghana, Volta River Authority and Ghana Grid Company, had 7.7 billion cedis in payable loans at the end of 2015, according to the International Monetary Fund.

Source: Bloomberg Business News