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Ghana/Kenya: Eurobonds to Decouple as Fiscal Challenges Come to Fore



Eurobonds - Investorsking

Ghana and Kenya, two of the sub-Saharan African sovereigns with the highest amount of outstanding Eurobonds, could see a widening of their risk premiums over 2021, according to a Senior Credit Analyst at Redd Intelligence, Mark Bohlund.

Faced with fiscal challenges, the two African nations are expected to return to the Eurobond market in the first quarter of 2021, but this time with bigger risk premiums as investors are expected to incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.

Mark Bohlund said, “Ghana and Kenya are likely to return to the Eurobond market in 1Q21 but see a widening of their risk premiums over 2021 as investors incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.”

With Ghana’s outstanding Eurobonds presently estimated at US$10.3 billion and Kenya’s outstanding Eurobonds put at US$6.1 billion, spreads on Ghana’s Eurobonds will increase over those of Kenya in 2021.

It is likely that spreads on Ghana’s eurobonds over those of Kenya will increase over 2021 as concerns rise over its weak fiscal position and high reliance on commercial overseas financing,” Bohlund stated.

Commenting on the countries’ fiscal positions, Bohlund said both countries are likely to post double-digit fiscal deficits this year, as contracting economies add to already faltering government revenue.

“With interest costs absorbing close to 50% of government revenue, Ghana will struggle to find sufficient cost- savings in other areas to reduce the fiscal deficit substantially in 2021.”

“In contrast to Kenya, Ghana has already cut back its capital expenditure to a bare minimum. The Bank of Ghana stepped up its purchases of government bonds sharply in September and we expect this to continue during 2021.

“In Kenya, part of the solution should be to encourage county governments to raise more revenue, but this will be challenging to implement before the August 2022 elections.

“Having shied away from bi- and multilateral creditors in favor of commercial borrowing, Ghana is likely to struggle to secure sufficient external financing in 2021. This makes increased central bank financing likely and poses downside risks to the cedi.

“Neither Ghana nor Kenya is likely to seek DSSI participation in 1H21 even if they deem that international bond issuance will not be possible.

“We have changed our view and now expect both Ghana and Kenya to issue Eurobonds in 1H21.

“Kenya is likely to continue to draw on funding from the IMF, the World Bank and other multilateral creditors, as well as bilateral financial support from China as the Standard Gauge Railway, continues to bleed funds.”

Bohlund added that the spreads between Ghana and Kenya Eurobonds are likely to widen further as a higher risk of a debt restructuring is priced into Ghanaian assets.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Lagos State’s Series IV N125 Billion Bond Opens for Subscription



Sanwo-olu - Investorsking

Lagos State Government has declared open it’s series IV N125 Billion bond under the state’s N500 Billion Bond Issuance Programme.

The subscription is scheduled to close at 2.00 pm on Wednesday, December 1, 2021, stated Coronation Merchant Bank Limited in an email forwarded to investors.

The email reads, “Coronation Merchant Bank Limited is pleased to announce that the Lagos State Government Series IV Bond of up to N125 Billion under the State’s N500 Billion Bond Issuance Programme is now open for subscription. The offer is scheduled to close at 2.00pm on Wednesday, December 1, 2021.”

Please see indicative terms of the offer below:

Lagos Bond

Click here to access the supporting offer documents indicated below.
  1. Series IV Bond Pricing Supplement
  2. Series IV Trust Deed
  3. The Series IV Bond Rating Report by Agusto & Co and Global Credit Rating Co.
  4. The Issuer’s Rating Report by Agusto and GCR
  5. The Issuer’s PENCOM Clearance Letter
  6. Commitment Form
  7. Eligible Individual Investor (EII) Form

For further enquiries, kindly reach out to any of the contacts below:

Suru Daniels
Investment Banking


Oluwatomilola Ajayi
Investment Banking


Emeka Mmakwe
Investment Banking


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Ardova Plc Announces N60 Billion Bond Programme




Ardova Plc,  a Nigerian leading indigenous and integrated energy company involved in the distribution of petroleum products, announced it has established a N60 billion bond programme.

The company also announced the successful issuance of N11,444,000,000 7-year 13.3 percent fixed-rate bonds and N13,856,000,000 10-year 13.65 percent fixed-rate bonds under the programme.

Ardova disclosed this in a statement signed by Oladeinde Nelson-Cole, Company Secretary/General Counsel.

It said “Ardova PLC is pleased to announce the establishment of its ₦60,000,000,000 (Sixty Billion Naira) bond issuance programme (the “Programme”) and the successful issuance of ₦11,444,000,000 (Eleven Billion, Four Hundred and Forty-Four Million Naira) 7-year 13.3% fixed rate bonds and ₦13,856,000,000 (Thirteen Billion, Eight Hundred and Fifty-Six Million Naira) 10-year 13.65% fixed rate bonds being tranches A and B respectively of the series 1 bonds under the Programme.”

The bonds are duly registered with the Securities and Exchange Commission. An application will be made to list the Bonds on the FMDQ Securities Exchange Limited.

Vetiva Capital Management Limited and Stanbic IBTC Capital Limited acted as Joint Issuing Houses, whilst Banwo & Ighodalo acted as Transaction Counsel. The trustees were advised by Aluko & Oyebode.

Commenting on the transaction, Mr. Olumide Adeosun, CEO of the Company said: “We are pleased with the successful conclusion of this transaction which again demonstrates investors’ confidence in the Company and provides additional resources for the Company to continue its expansion projects.”

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150bn FG Bonds for Auction in November



Bonds- Investors King

The Debt Management Office (DMO), the government agency that coordinates the management of Nigeria’s debt, has said that Federal government N150bn bonds will be up for subscription this month.

In a circular available on the website of the Debt management agency, the bonds are to be auctioned on November 17 while the settlement date was set for November 19.

The Federal Agency had on September 17 announced the Federal government plans for Eurobond issuance in the international capital market (ICM). The issuance, as announced in September, was to avail local investors of the opportunity to invest.

Almost a month after, the federal government is up with N150 billion bonds. The bonds are broken into three with each worth N50bn.

A further breakdown available in the circular by DMO showed that the bonds are a 10-year re-opening bond offered at the rate of 12.50 percent and is to mature in January 2026. There is the 20-years re-opening bond to be offered at 16.2499 percent and will mature in April 2037. There is also a 30-year re-opening bond to be offered at 12.98 percent and mature in March 2050.

Similarly, according to the circular, the bonds will offer N1,000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.

The interest rate is payable semi-annually. For the interest rate, “For Re-opening of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument,” DMO said.

The circular also stated that the bond qualifies as a security. It read, “FNG bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.”

As regards redemption, the circular stipulated bullet repayment on the maturity date.

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