Ghana sold a $750 million 10-year Eurobond on Thursday in its second foray into international bond markets but paid a premium to investors wary of its fiscal and current account deficits.

wpid-Ghana-Cedis.jpgIt also bought back $250 million of its outstanding 10-year issue due in 2017, Terkper said.

The West African producer of cocoa, gold and oil issued the bond at a yield of 8 percent. The order book was $2.2 billion, around three times the issue size, Finance Minister Seth Terkper told Reuters.

Ghana is one of Africa’s brightest economic prospects due to its rapid growth rate and stable democracy and has also attracted foreign investors to its domestic bond market.?The economy, according to him ?is set to grow by 8 percent this year.

The Eurobond yield stands at a premium to the 2017 instrument, currently trading at around 6 percent, suggesting investors were unwilling to overlook the fiscal picture.

Ghana is trying to contain a budget deficit that surged to 11.8 percent of gross domestic product in 2012, up from 4 percent in 2011, partly as a result of public wage increases.

“This (yield) suggests that Ghana offered a decent premium to compensate investors for the risks associated with the country’s fiscal and macroeconomic imbalances,” said Samir Gadio, emerging markets strategist at Standard Bank.

President John Mahama’s government, which won elections December, says it aims to reduce the deficit to 9 percent of GDP in 2013 in a country that is the world’s second largest producer of cocoa and Africa’s biggest gold producer after South Africa.

Terkper and central bank Governor Henry Kofi Wampah played down any impact of the macroeconomic picture on the bond yield and said external factors accounted for any premium.

“We cannot say the coupon rate we paid was based on Ghana’s risks. It’s primarily about the unfavourable general conditions globally,” Wampah told Reuters, adding the coupon was 7.875 percent.

The country could have paid around 5 percent had it issued the Eurobond before a selloff in emerging market assets that followed comments by Federal Reserve Chairman Ben Bernanke earlier this year, according to one investor. The yield on the 2017 bond traded as low as 4.24 percent in April.

“What alarmed us as investors is the fact that the timing was bad,” said the investor, who declined to be named. “Based on our analysis, the opportunity cost loss is at least $100 million on a net present value basis. That’s four district hospitals if you want it in social terms.”


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