BoG grants approval to Letshego for GH¢200m issuance

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Letshego Ghana remains on course to issue another GH¢200 million in corporate bonds, having received approval from the Bank of Ghana (BoG) its Chief Financial Officer, Poelo Mkpayah, has indicated.

The move will enable it to extend micro-credit to individuals and businesses, having disbursed GH¢13.6billion to 5.6 million customers with average daily transactions hitting 194,000.

Providing an update on the state of the facility when the company took its turn at a Facts behind the Figures session hosted by the Ghana Stock Exchange (GSE), she explained all that remains before its coming to market is final approval from the capital market regulator – the Securities and Exchange Commission (SEC).

“We have received BoG approval to issue an additional GH¢200million… We are currently going through SEC approval and will definitely be coming to the market soon,” she said.

If successful, it will bring to GH¢500million funds the company has raised through the Ghana Fixed Income Market (GFIM) of the GSE to bolster its operations.

The lender, with portfolios in payroll and mobile facilities, will proceed on a road show after SEC’s approval to speak to a number of partners who have supported it over the last couple of years, added Country Chief Executive Nii Amankra Tetteh.

This comes as GSE is promoting the listing of approximately 36 new corporate bond issuers on the Ghana Fixed Income Market, GFIM, over the next five years – which translates to an average of at least five new issuers per year. This move aims to provide long-term funding opportunities for the private sector.

Ratings

Mr. Tetteh stated that the company has seen its bond ratings improve following a recent review. It is now ‘BBB -, with a stable outlook’, compared to an earlier ‘BBB-, with a negative outlook’; a rating that was related to the broad macroeconomic conditions.

Commenting, Managing Director-GSE, Abena Amoah, expressed delight with Letshego over the assessments of its bonds; saying the goal is to make it a universal practice on the market as a means of boosting confidence.

“Another service we want to see more of from our corporate issuers is bond-rating.  I was very excited to hear about Letshego’s new ratings, and we encourage you to release your new ratings through the market. We will create space on the fixed-income daily market reports to reflect your ratings and encourage other corporates to undertake rating services,” she said.

The GSE’s MD added it will be partnering with others to take the lead in ensuring bond ratings become a key feature in the domestic market, adding that engagements will be had to ensure investors come to understand the ratings and use them to guide their decision-making.

Year in review

In 2022, the Domestic Debt Exchange Programme (DDEP) resulted in a drop of pre-tax profit to GH¢7.52million from GH¢55.2million in the previous year, as it incurred a GH¢30.9million cut on its cedi and US dollar-denominated instruments.

“We are not expecting additional impairment on dollar-denominated bonds, as our mid-year assessment shows that what we provided for in 2022 is enough coverage and we do not hold any cocoa bills,” Mr. Tetteh said.

Letshego remained well-capitalised, closing last year with a capital adequacy ratio (CAR) of 16 percent – which was 6 percentage points over the 10 percent floor, largely due a GH¢15million capital ingestion from its shareholders.

Already, this year’s customer deposits have reached GH¢81million – with the pre-tax profit at GH¢18.3million for first-half of the year.

Cautiously confident

The Letshego helmsman stated that his outfit is continuing to look at the informal sector, as it seeks to introduce new products – especially in areas such as green and agric financing from the last quarter of this year into 2024.

He added that a lot of preparation is going into understanding, adhering to and reporting on environmental, social and governance (ESG) issues, saying this is important for future growth.

“By the time we go into the first-half of next year and we are reporting, you will see a lot that we have done in these areas. We are putting measures in place to ensure that we are not just participating but leading and seeking to achieve global standards… For these reasons, we are cautiously confident for 2024,” he added.

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