The International Finance Corporation has secured approval to regularly issue local currency bonds in Ghana worth up to $1 billion to bolster the West African country’s domestic bond market, it said on Wednesday.

IFC, the World Bank’s private sector arm, said Ghana’s Securities and Exchange Commission and the Ghana Stock Exchange had given consent for the bond programme, which will enable it to sell cedi-denominated bonds when the need for financing arises.

 

The bonds will be sold to domestic and foreign institutional investors and proceeds will be used to fund private sector projects in areas such as infrastructure and to increase access to finance for small and medium-sized enterprises.

Ghana’s bond market is popular with foreign investors who often dominate auctions of 3- and 5-year bonds, but it lags behind others in sub-Saharan Africa in terms of sophistication.

The cocoa, gold and oil producer will issue its first 7-year bond on Thursday in a bid to lengthen its yield curve, while Nigeria and Kenya already offer bonds with durations of up to 20 and 30 years respectively.

“Supporting domestic capital market development is a priority for IFC because such markets efficiently intermediate funds in an economy,” IFC vice president and treasurer Jingdong Hua said in a statement.

“The consent from the Ghanaian authorities enables us to support the deepening of the local capital markets and offer local-currency funding for priority sectors such as infrastructure.”

IFC, whose local currency bonds are rated triple-A by Moody’s and Standard & Poor’s, issued a debut 12 billion naira ($74.49 million) bond in Nigeria in February. The 5-year instrument was sold at a yield of 10.2 percent.

The organisation also has approval for a $1 billion bond programme in Nigeria, it said this month.

It also plans to issue debt in Botswana, Kenya, Namibia, Rwanda, South Africa, Uganda and Zambia under its pan-African domestic medium-term note programme launched in May 2012. 

Source: Reuters (Reporting by Tosin Sulaiman)