Government has invited bids from local investment banks and investment advisors to serve as Co-Managers for the 2021 Medium Term International Capital Markets (ICM) bond issuance programme.

For the 2021 portion of the programme, the Government intends to raise up to US$ 5.0 billion to support growth-oriented expenditures in the 2021 Budget, conduct liability management including refinancing domestic debt and a buyback of some selected outstanding Eurobonds.

As such, the Ministry of Finance has invited Expressions of Interest from qualified and reputable Co-Managers to partner the International Transaction Advisors for the various instruments under the programme.

The Ministry had issued an invitation for international transaction advisors – who will expectedly serve as the senior partners of the local co-managers selected – late last year.

“It must be noted that, in accordance with the Requirements and Responsibilities of Primary Dealers and Bond Market Specialists, the Co-Managers would be sourced from those who qualify as Bond Market Specialists and/or Investment Advisors,” a statement published by the Finance Ministry said.

Whoever is selected as local co-managers can expect to secure huge revenues – even a one percent fee on US$5 billion in international bond issuances would amount to US$50 million.

The selection process for securing local co-managers will be watched closely not just by the local investment community but by the political class as well.

This is because a leading contender is Databank, the largest and most successful indigenously owned investment bank and advisory firm with regards to international transactions.

But although its track record of accomplishment and exemplary institutional capacities are not in doubt, the fact that it is co-founded and owned by the current Minister of Finance, Ken Ofori-Atta would generate intense protestations of conflict of interest by the incumbent government’s political opponents in particular.

Instructively, its involvement in the troubled Agyapa Gold Royalties initiative – which was not openly disclosed from the start – was a major reason why the recently resigned Special Prosecutor called for the initiative to be scuttled on the grounds of its potential for corruption.

The instruments for the programme consist of Eurobonds; Diaspora Bonds; Sustainable Bonds (Green Bonds and Social Bonds); and Syndicated Term Loans. However only the Eurobond issuance of at least US$3.5 billion, but possibly as much as US$5 billion has actually been confirmed and this is expected to done as early as the end of the first quarter of this year.

Nevertheless, a diaspora bond issuance has been on the cards for the past two years as well.

The selected Co-Managers shall be required to develop, or review, a financing plan including recommendations for the timing and amount of bonds to be issued; advise as to the various financing alternatives available to the Government; assist the Ministry to develop credit rating presentations and coordinate with the Ministry the presentations to credit rating agencies; review the terms, conditions and structure of any proposed debt offering undertaken by the Ministry; and provide suggestions, modifications, and enhancements where appropriate and necessary to reflect the constraints or current financial policy and fiscal capability.

They will also be required to coordinate with the Ministry’s staff and other advisors as respects the furnishing of data for offering documents; review Preliminary Investor Presentations prepared on behalf of the Ministry for use in marketing bonds; advise the Ministry on the condition of the bond market at the time of sale, including volume, timing considerations, competing offerings, and general economic considerations; assist and advise the Ministry in negotiations with investment banking groups regarding fees, pricing of the bonds and final terms of any security offering and make recommendations regarding a proposed offering to obtain the most favorable financial terms based on existing market conditions; work with the International Transaction Advisors and other professionals including Legal Counsel and Local Advisors to assist in the execution of the program where necessary.