Tuesday, 14 April 2020

Govt borrows GHC17.9b from local market for 2nd quarter

Banks, financial institutions will be opened during partial ...


By Elorm Desewu

The government, through the Bank of Ghana, (BoG), will for the second quarter of this year raise an amount of GHC17.9 billion, from the domestic money market by issuing Treasury Bills, Notes and Bonds.

This amount is slightly lower than GH¢19.087 billion the government borrowed during the first quarter of this year.

Of the GH¢17.95 billion, GH¢13.6billion would be used to rollover maturities and the remaining GH¢4.27billion is fresh borrowing to meet Government’s financing requirements.

For the second quarter of 2020, the Bank of Ghana would issue 91 day Treasury Bills worth GHC8.2 billion, 182 day Treasury Bills worth GHC1.62billion, 384 day Treasury Bills worth GHC2.75 billion, a 2 year Notes worth GHC700 million, a 3 year worth GHC1.8 billion, a 5 year bond worth GHC1 billion, a 7 year bond worth GHC800 million, a 10 year bond worth GHC800 million and a 20 year bond worth GHC287.87 million.

The Calendar is developed based on the Net Domestic Financing in the 2020 Budget, the domestic maturities and the Medium Term Debt Management Strategy (MTDS) for 2020-2023.  The Calendar shows the securities that are intended to be issued in respect of Government’s Public Sector Borrowing Requirements for the period January to March, 2020.

Per the calendar, Government aims to build benchmark bonds through the issuance of the following instruments:  The 91-day and 182-day will be issued weekly; The 364-day bill will be issued bi-weekly also through the primary auction with settlement being the transaction date plus one working day; Securities of 2-year up to 10-year will be issued through the book-building method; Issuance of the 20-year bond as a shelf offering will be re-opened based on investors request and on market conditions.

The Calendar also takes into consideration Government’s liability management programme, market developments (both domestic and international) and the Treasury & Debt Management objective of lengthening the maturity profile of the public debt.

The 2020 debt strategy focuses on an appropriate financing mix to mitigate the costs and risks to achieve the desired composition of the public debt portfolio with respect to borrowing from external and domestic sources.

 The financing strategy for 2020 proposes issuances of Government securities on the domestic market and create cash buffers on top of the programmed net domestic financing for active liability management and cash management purposes.

The strategy is to issue / re-open medium to long-term instruments (2-year, 3-year, 5-year, 7-year, 10-year, 15-year and 20 Year bonds) and refinance some of the maturing Treasury bills and Bonds. The strategy also plans to issue marketable and non-marketable debt against possible contingent liabilities arising from the financial and energy sectors in 2020.

On the external front, the strategy proposes the issuances on the International Capital Market provided market conditions are favourable and additional external borrowing for priority development projects, which cannot be financed on concessional terms.


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