Ghana Considers a Second Sovereign Bond

May 31, 2010

Ghana is considering selling its second dollar-denominated bond next year to tap investor demand as the start-up of oil production boosts economic growth and narrows the budget deficit, Deputy Finance Minister Fifi Kwetey said.

Kwetey added that the Ghanaian government is considering a “no-deal road show” as early as the end of this year to gauge international investors’ appetite.
In 2007 Ghana sold its first sovereign bond, raising 750 million US dollars, with the objective of boosting the infrastructure sector. Since then, the budget deficit surged to 24 percent of GDP in 2007 and inflation reached 20.7 percent in June 2009. “The only reason why we didn’t go back to the market is because we had our fair share of turbulence” Kwetey remarked. Bloomberg reports that inflation fell to 11.7 percent in April and that the government plans to cut the fiscal deficit to 7.5 percent of GDP by the end of the year. The government estimates that it needs about 2 billion US dollars a year to fund its infrastructure needs, which a sovereign bond will help fund, Kwetey said.