Niyi Aderibigbe

Ghana eurobond oversubscription shows growing global investor interest in Africa

With investors showing interest in Ghana’s longer-dated maturities as seen in the just-concluded Eurobond issue which was seven times oversubscribed, the West African country plans to issue longer-dated hard currency bonds in its next bond sale.

“We need longer-term financing for our infrastructure needs […] and we will naturally keep extending the curve,” Ghana’s Finance Minister Ken Ofori-Atta told Reuters following a roadshow in London. According to him, a number of investors have approached him about issuing a 50-year bond.  

Ghana, the world’s second largest cocoa producer, had ended up getting orders of more than $21 billion from international financial institutions for the three-tranched $3 billion Eurobond sale with maturities of seven, 12 and 31 years. The Finance Ministry said nearly half of the order was for the 31-year maturity, showing how successful a longer-dated issue might be.

Ghana’s President Nana Akufo-Addo had last September said that the country could issue a 100-year $50 billion bond to fund a long-term industrialisation plan.

While the government described the oversubscription as a vote of confidence by the global investor community in the country’s future economic outlook, it only accepted $3 billion which was budgeted for and approved in the country’s 2019 Budget Statement and Economic Policy of the government.

With Ghana’s $3 billion issue, Africa has become a $100 billion Eurobond market driven by large issuance from Nigeria, South Africa and Egypt, and debut of some countries on the continent, with 21 African states to have issued African sovereign eurobonds. The development shows that the global investor community is getting more comfortable taking a bet on Africa.

Analysts have said earlier in the year that Eurobonds from sub-Saharan Africa will perform better this year, having suffered in the tough markets of 2018. Samir Gadio, head of Africa strategy at Standard Chartered told Reuters that the improved performance “probably reflects their high-yield status, cheap valuations at the end of 2018 and lighter investor positioning at the time”.