This week, government will issue cedi denominated domestic debt securities in the form of two-year treasury notes, with a targeted amount of GH¢600 million.

The process for the issuance of the treasury notes will begin today with the opening of the book-build, following the release of an initial pricing guidance through the Ghana Stock Exchange, yesterday.

According to an announcement made by the Bank of Ghana on Monday, August 24, 2020, the Bonds will mature in August 2022.

To date, government has issued GH¢1,153.49 million in two-year treasury notes , at an average yield rate of 16.93 per cent.

Increased liquidity on the Ghana Fixed Income Market, GFIM, since the beginning of this year – the effects of the COVID 19 outbreak notwithstanding – has made investment in medium term government debt securities particularly attractive to investors, because they offer significant coupon rate premiums over short term securities – none of which currently offer coupon yields above 15 percent – but investors can exit any time they wish through secondary market transactions.

Government also plans to issue GH¢577 million for both the 91-day and 182 -day treasury bills.

Each bond to be issued shall have a face value of GHc 1, with a minimum subscription of GH¢50,000 and multiples of GH¢1,000 thereafter. The offer will be opened to both local and foreign investors.

Books are expected to be closed midday on Thursday, around 2:30 pm, with the revised and final pricing determined.

Successful bids will be cleared at a single clearing level. However, in the event of oversubscription, there will be a discretionary allocation at the single clearing level. Investors are expected to be settled or issued with the bonds on Monday, August 17, 2020.

The two-year treasury note would be issued through Absa, Databank, Fidelity Bank, IC Securities and Stanbic Bank acting as book runners for government.

Government Debt Strategy

According to the 2020 mid-budget statement, Government has revised its Debt Sustainability Analysis (DSA) conducted in 2019 in order to assess the impact of COVID-19 pandemic on revenues, expenditures, and financing in the medium to long-term.

The result of the 2020 COVID-19 DSA shows that Ghana’s debt distress from external and domestic sources remains unchanged from the results of the previous 2019 DSA which was sustainable but high. The shocks from COVID-19 pandemic, resulting in a fall in crude oil prices and decline in trade volumes aqnd values, are expected to deepen the current account and fiscal deficits over the medium-term, resulting in an elevated debt path compared to the pre-COVID-19 2020 DSA.

Nevertheless, fiscal costs, including those associated with the pandemic response and measures to support economic activity, as well as a more prolonged crisis, could have the greatest impact on debt sustainability.