* Finance minister says issue oversubscribed
* May boost government's position in next week's IMF talks
By Matthew Mpoke Bigg and Kwasi Kpodo
ACCRA, Sept 11 Ghana sold a $1 billion Eurobond
on Thursday at a coupon rate of 8.125 percent, lower than
analysts had expected given the fiscal difficulties faced by the
West African producer of cocoa, gold and oil.
The country is a rarity in West Africa due to its record of
political stability and sustained strong economic growth, but it
is wrestling with escalating inflation, a falling currency and a
stubbornly high budget deficit.
The bond was oversubscribed with orders of up to $3 billion,
said Finance Minister Seth Terkper, who was in New York for the
Ghana sold Eurobonds in 2007 and in 2013, when the yield was
8 percent, but analysts expected a higher rate this time. The
rate reflected the appetite for relatively risky sovereigns
given lower yields in developed markets, they said.
"Investors saw fundamental long-term value in the Ghanaian
economy. We have always emphasized that the mid-term prospects
for Ghana were bright and with the coming on board of the IMF,
we hope to come out of our short-term challenges pretty soon,"
Terkper said in a statement.
Ghana is set to begin talks with the International Monetary
Fund on Tuesday on an assistance programme aimed at restoring
fiscal stability and promoting economic transformation.
The bond is a soft amortising bond, amortising in years
2024, 2025 and 2026 with principal repayment in three
instalments of $333 million in 2024 and 2025 and $334 million in
2026, Terkper said.
The timing of the bond is the subject of intense interest,
given the imminent IMF talks.
Ghana's currency, the cedi, fell around 40 percent against
the dollar between January and August but has gained ground in
the weeks since the IMF announcement, in part because of that
and the expected Eurobond, traders said.
The local unit closed higher at 3.500 to the dollar on
Thursday after hitting a record low of 3.9000 in July.
The Eurasia Group political risk consultancy said the
government was seeking to play investors and the Fund against
"Its (the government's) strategy is to use its recent IMF
outreach to bolster investor confidence on the eve of its bond
issuance while simultaneously leveraging the Eurobond to
strengthen its negotiating position with the Fund," Eurasia said
in a research note. Government officials have denied this.
The bond is likely to be seen as successful, given that it
was oversubscribed and sold at a lower rate than expected. This
could buy the government some breathing room as well as a
much-needed source of debt finance.
"The yield that they sold at is quite good considering that
they have all sorts of economic imbalances. There is a strong
demand from developed economy investors that highlights how bad
returns are for developed economy investments," said Angus
Downie, head of economic research at Ecobank, a pan-African
"It gives them a stronger negotiating position with the
IMF," he said.
Ghana's Eurobond will likely have little direct political
impact but it could feed into economic calculations in the
run-up to 2016, when President John Mahama may seek a second
four-year term after a knife-edge vote in 2012.
Opposition finance spokesman Mark Assibey-Yeboah attributed
the lower-than-expected yield to the availability of cheap money
globally rather than to the economy's underlying strength.
"Our troubles are not going away. People are still looking
at our fiscal situation," Assibey-Yeboah of the New Patriotic
Party told Reuters.
(Editing by Mark Trevelyan)