The Syndicated Bridge Loan Facility Agreement between the Government of Ghana and Standard Chartered Bank, United Kingdom and the Standard Bank of South Africa Limited for an amount of Seven Hundred and Fifty Million United States Dollars (US$750, 000, 000. 00) to fund or refinance various infrastructure development projects and for liability management in Ghana as approved in The 2019 Budget has been adopted.
It will be recalled that as stated in the 2019 Budget Statement and Economic Policy and as approved by Parliament on December 21, 2018, the Ministry of Finance is to raise up to US$3.00 Billion from the International Capital Markets (ICM).
The Budget also indicated Government’s intention to explore the possibility and feasibility of issuing one or a combination of the following debt: Century bond; Green bond; Panda bond Samurai bond and Commercial loan.
Following the Parliamentary approval, The Chairman of The Finance Committee in Parliament, Dr. Mark Assibey-Yeboah said the Ministry of Finance appointed Transaction Advisors through the quality based procurement process.
It was the first time that this process of engagement had been used instead of the restrictive tendering process.
Government expects that the roadshow for the Eurobond will be executed by the second week of March, 2019.
“Whilst the necessary processes are ongoing for the 2019 bond issuance, Government is sourcing this bridge facility as an interim measure to help keep Government’s economic programme for the year on track,” Dr. Assibey-Yeaboah recounted.
The proceeds from the bridge financing would be used to, (b) finance critical infrastructure and Government’s priority programmes on growth; and (b) conduct liability management on maturing domestic bonds.
The Committee noted that the intention to raise up to US$3 .00 Billion from the International Capital Markets (ICM) is aimed at financing critical capital infrastructure, growth related expenditures and liability management.
This is consistent with the Medium Term Debt Strategy (MTDS) of Government to adequately finance the budget at least cost and prudent level of risk.
The Committee however, observed that, over the past few weeks, there has been declining capital inflows from offshore investors as well as increased rollover risks for maturing domestic bonds.
These pressures have affected Government’s domestic deficit financing and refinancing of outstanding debt securities.
Due to these pressures, two (2) of the selected Advisors have proposed to provide the Government with the bridge loan facility in anticipation of issuance of the Sovereign Bond in a few weeks.
Terms of the Facility are as follows:
The Bridge Facility Amount: US$750 Million
Interest Rate: 1 Month US LIBOR plus a margin of 3.50% p.a. Tenor: Up to 6 months Arrangement Fee: 0.32°/o p.a. And the loan will be repaid with proceeds from the 2019 Sovereign Bond.
Story by Edzorna Francis Mensah
