November 6, 2017 / 8:17 PM / in a year

Ghana sells less than targeted of 10-year energy bond

ACCRA, Nov 6 (Reuters) - Ghana sold 2.29 billion cedis ($519 mln) of a 10-year bond launched to repay debts owed by power utilities, the banks that arranged the transaction said on Monday — less than it had targeted as demand fell short of expectations.

The issue size was less than the 3.6 billion cedis the West African country had sought to raise with the issue, which was offered to local and foreign investors alongside a seven-year bond on Oct. 24. The government will pay a yield of 19.5 percent.

The government set up a special purpose body, ESLA, to issue the twin bonds, which are backed by receivables from a petroleum tax. It hoped to raise six billion cedis out of a total 10 billion cedis required to clear the debts.

“The issuer in consultation with transaction advisors made a decision to decline offers in excess of its price target,” the arrangers said in a statement late Monday.

Bids for the 10-year paper totalled 2.79 billion cedis with a yield range between 19 percent and 20 percent, they said.

The government named Standard Chartered Bank and local lender Fidelity as lead managers for the bonds in June.

A local fund manager told Reuters offshore investors had been reluctant to buy the 10-year paper because the debt was not covered by a sovereign guarantee.

“It comes across as an unusual structure and risk-averse investors, especially foreign buyers were shying away from it,” the fund manager added. (Reporting by Kwasi Kpodo; Editing by Catherine Evans)

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