(Adds investor quote)
By Sudip Roy
LONDON, Sept 8 (IFR) - The Republic of Ghana is hoping to be
second time lucky with a potential US dollar bond offering.
The sovereign has resurrected a deal it postponed in August
because of disagreement with investors over pricing levels.
At the time investors wanted a yield of least 10%, given
where Ghana's outstanding bonds were trading, but the sovereign
balked at paying that level.
Since then Ghana's bonds have rallied substantially, with
its 2026 notes quoted at 9.42% on Wednesday's close, according
to Thomson Reuters data, and its 2023s at 9.35%.
This has encouraged Ghana to return, with an initial
marketing level for the new notes of high 9%.
The structure is the same as before, with Ghana planning to
issue an amortising bond with a weighted average life of five
years. The sovereign has also opened a buyback offer on its 8.5%
due 2017 notes.
"They do seem a bit desperate to repay the 2017s now to
manage their cash flow and I really think they didn't issue last
time because they didn't want to issue above 10%," said Delphine
Arrighi, portfolio manager at Old Mutual Global Investors.
"With markets having rallied a bit more since then, they are
now able to issue below that 10% threshold so they are grabbing
the opportunity while it is there."
Another investor said his firm would consider the offer,
though he was wary of the country's track record. One worry is
how quickly it will receive its next disbursement from the IMF
as part of a US$918m aid deal. The money was initially due by
the end of August.
However, talks with a Fund delegation only ended last week,
though sources told Reuters the next disbursement could come
One reason for the talks was the passage in parliament in
August of a bill that allows the central bank to finance the
government up to a limit of 5%. The IMF has recommended zero.
Another potential risk is a general election in December,
said the investor.
The benchmark-sized bond, which has three equal repayments
in 2020, 2021 and 2022, is today's business.
Bank of America Merrill Lynch, Citigroup and Standard
Chartered are the leads. Ghana is rated B3/B-/B.
At the same time, the sovereign has announced a further
tender of its 2017 notes. Last month Ghana bought back just
under US$100m of the bonds through a tender that still went
through despite the postponed new issue.
(Reporting by Sudip Roy; additional reporting by Robert Hogg,
editing by Julian Baker)