A renowned international investment banker, Dr Samuel Ankrah, has described the government’s $2.5 billion bond deal as a positive step that fits into the government’s debt management strategy.
As a result, he has called for a halt to discussions regarding the process and instead asked that the Minister of Finance be commended for leading the efforts to help find cheaper funds to cater for the country's maturing debts.
In an interview, Mr Ankrah, who waded into the long-standing debate said, "This bond issuance represents the largest amount issued by a sub-Saharan African country in a single day. The bond issuance successfully raised a total of $2.25 billion and resulted in the lengthening of the maturity profile of government debts, thereby reducing the short-term redemption and rollover pressures on the government.
He noted that the proceeds from the bond issue were to be used for liability management and for the re-profiling of Ghana’s domestic debt stock by repaying more expensive short-term debt as it matured, adding that unlike speculations in the media, the debt will "not add to the total debt stock of the nation. In fact, this is the best way to re-finance a nation’s debt and in conformity with the government’s liability management strategy which seeks to re-profile public debt stock, extend tenors, reduce short-term rollover pressures and lower domestic interest cost”.
"The $2.25 billion bond issuance will further help improve Ghana’s foreign exchange reserves by over $2 billion and additionally support the cedi, thereby strengthening the country’s macroeconomic stability," he added.
Reacting to the concerns raised by the Minority in Parliament over the bond, Dr Ankrah said, "While the opposition party in Parliament has the legitimate right and voice to criticise the Finance Minister on the mechanics and approval process of the bond issuance, I believe their criticism on regulatory breach of bond issuance, transparency, conflict of interest and lack of parliamentary approval is not the best."
Mr Ankrah said after studying the issues, it was obvious that the laid-down procedure was followed to issue the bonds and "I believe the Ministry of Finance followed the Bank of Ghana established guidelines governing bond issuance".
For instance, he noted that the rule stipulated that where applicable, a prospectus would be published by the issuer, inviting bids from qualified bidders for the bonds to be issued in advance of the auction.
Again, he said, only financial institutions licensed by the Securities and Exchange Commission (SEC) to deal in securities and authorised by Bank of Ghana as Primary Dealers/Joint Book Runners were eligible to participate in the auction of debt securities.
"The Ministry of Finance is required to publish a quarterly calendar for the issuance of government securities, adding that: "Unless otherwise stated in a prospectus for the issue of a bond, auctions shall be set up on Fridays and made available to all Primary Dealers on the auction terminal for the input of bids same day at 8.30 a.m.
Dr Ankrah further argued that the bond issue, like all the others done previously, could not have been designed to favour any single investor.
"The orthodox processes for the issue of bonds using the book building approach were adhered to in this particular issuance," he said.
He said Franklin Templeton (FT) engaged various market participants and other key institutions, including the International Monetary Fund (IMF), before deciding to participate in the bonds.
"It is worth noting that local investors also participated. FT participated in the issuance in the manner they have always done since 2006 through their local Primary Dealer, Barclays Bank, and their local custodians, Standard Chartered Bank and Stanbic Bank. To have obtained preferential treatment, all the above-mentioned institutions would have had to conspire to do so, a situation which is profound and FT would have breached U.S. and U.K foreign corrupt practice laws,” he noted.
"In fact, FT has held GoG bonds of up to $ 2 billion prior to this transaction. Indeed FT has been buying and investing in government bonds since 2006. Furthermore, the bond issuance, like all other domestic bonds issued under this bond programme since 2015, did not require parliamentary approval," he added.