From June to August, 2020, government is set to issue cedi-denominated domestic debt securities to the tune of GHc 17,837.87 million from the domestic market.
This is according to the public debt issuance calendar for the period June to August 2020 issued by the Finance Ministry.
The securities are to be issued in respect of government’s Public Sector Borrowing Requirements for 2020.
Government is expected to update the issuance calendar on a monthly rolling basis, to reflect a full quarter financing programme. This is due to prevailing extraordinary circumstances brought about by the coronavirus outbreak.
For now though, of the targeted amount, GHc 15,806.61 million has been earmarked be used to rollover maturing domestic debts, whereas the remaining GHc 2,031.26 million would be fresh issuance, to be used to meet government’s budgetary financing requirements.
In July, 2020, the Finance Minister, Ken Ofori-Atta will present to Parliament a revised budget, in order to reposition Ghana’s economy to meet the global effects of the novel Coronavirus pandemic. The new fiscal policy will re-examine government expenditure to meet the revised revenue target. This will certainly revise government’s financing requirements and consequent debt securities issuance for both July and August
Under this new debt issuance calendar, domestic portfolio investors will be able to invest up to GHc 12,550 million in short term government debt securities which are not open to foreign investors. This amount comprises debt securities with tenors of 91 days, 182 days and 364 days to be issued during the period, all of which are reserved strictly for domestic investors.
The remaining portion of the securities, worth GHc 5,287.87 million and comprising debt securities with tenors from two years up to 20 years, would also be made available to non-resident investors as well, who have tended to dominate subscriptions of such medium to long-term issuances to date.
The calendar is based on the Net Domestic Financing provided in the original 2020 Budget, announced in November last year, domestic debt maturities and the Medium-Term Debt Management Strategy (MTDS) for 2020-2023.
The calendar also takes into consideration government’s liability management programme, market developments (both domestic and international) and the Treasury and Debt Management objective of lengthening the maturity profile of the public debt as well as lowering debt servicing costs where possible.
Per this calendar, government aims to issue weekly the 91-day and 182-day bills, whereas 364-day bills will be issued bi-weekly, through the primary auction with settlement being the transaction date plus one working day.
A total amount of GHc 8,950 million, GHc 1,750 and GHc 1,850 million have been planned to be issued for the 91-day, 182-day, and the 364-day bills, respectively.
For securities of between two years and 10-years tenors, government will issue them through the book-building method using its five selected book runners.
Amounts of GHc 600 million and GHc 1,000 million respectively have been tentatively planned to be issued for the 2-year notes and 3-year bonds, along with a targeted amount of GHc 800.00 million in 5-year bonds. A total of GHc 800 million hasm been targeted through the issuance of 6-year bonds and 10-year bonds respectively, whereas, GHc 1,000 million is expected to be issued for the 7-year bond.
An amount of GHc 287.87 million worth of 20-year bonds, which are expected to be issued as a shelf offering, will be re-opened based on investors request and dependent on market conditions, the statement said.
Consistent with the MTDS, government may announce tap-ins/reopening of other existing instruments.