The Bank of Ghana (BoG) will sell GH¢1.2 billion worth of three-year bonds in the first half of the year, according to its debt-issuance calendar for the period.

Three separate auctions, each of which will offer GH¢400 million of the bonds, will be held in January, March and June, the BoG said.

The last three-year bond, sold in October to raise a targetted amount of GH¢500 million, ended up selling GH¢1.46 billion at a coupon rate of 21%.

Since February 2012 the government’s three-year borrowing rates, then at 15%, have gained six percentage points to 21% as the BoG offered higher yields to investors to offset exchange rate losses resulting from the weak cedi.

Finance Minister Dr. Kwabena Duffuor told B&FT the first of the auctions, which has been planned for Thursday, will offer investors a chance to reaffirm their confidence in the economy following successful elections that, contrary to some analysts’ predictions, did not destabilise the macro- economy.

Despite quiet anxieties among some analysts about what appears to be a larger budget deficit than projected for the 2012 fiscal year, the macro-economy has fared well, generally, with inflation stable and the exchange rate stronger in the last quarter of the year.

Asked if he expected a yield below 21% at the auction on Thursday, the Minister said: “It will depend on the demand. And if the inflation figure that will be released on Wednesday is good, it will give a boost to the floatation.”

The Ghana Statistical Service (GSS) is expected to announce the inflation reading for December 2012 today, which will show whether the increased spending and demand during the holiday season have affected consumer prices substantially.

The inflation rate rose in November to 9.3%, from 9.2% the previous month, marking 30 consecutive months of single-digit average-price increases. Investors in Thursday’s bond will take note of today’s inflation announcement, and keep another eye on developments in the exchange rate ahead of the auction.

The cedi, which strengthened by 0.05% against the US dollar in December, slipped by 0.24% between January 2-7 while gaining against the pound sterling, euro and CFA in the same period.

“This week’s bond auction will supply liquidity to the market, which will support the cedi and maintain the stability,” said Yaw Adu-Koranteng, a currency analyst at Gold Coast Securities Limited in Accra. Inflation pressure in 2013

The GSS will change to a new Consumer Price Index (CPI) basket in 2013, a move that could affect the inflation trend as some items from the old basket would be removed and new weights would be assigned to components such as communications and transport.

Inflation could also come under pressure to increase this year if the government withdraws hefty subsidies on petrol, electricity and water. Last year the Finance Ministry budgeted GH¢697.7 million for the subsidies, about three-quarters of which benefitted petroleum fuels.

In May 2012, two months before the completion of its stabilisation pact with the government, the International Monetary Fund (IMF) urged “an elimination of costly subsidies on fuel and energy consumption” during discussions with senior government officials including the then President.

An important argument against the subsidies is that they benefit the rich and the middle-class disproportionately, as these people tend to be high energy consumers.