Connect with us

Markets

Ghana Is Said to Weigh Scaling Down $2.3 Billion Bond Plans

Published

on

bonds
  • Ghana Is Said to Weigh Scaling Down $2.3 Billion Bond Plans

Ghana is considering scaling down plans for a 10 billion cedis ($2.3 billion) local-currency bond sale as the West African nation struggles to identify revenue sources for interest and capital repayments, according to two people familiar with the matter.

The debt, which will be issued through a special-purpose vehicle and backed by a tax on the sale of petroleum products, may be staggered in smaller tranches as the projected income from the levies are only sufficient for a bond sale of 7 billion cedis over 15 years, said the people, who asked not to be identified because they’re not allowed to speak publicly about the issue. The matter was discussed at an Aug. 16 meeting where the Finance Ministry and deal advisers Standard Chartered Bank Ghana Ltd. and Fidelity Bank Ltd. gauged investors’ appetite for the debt.

The ministry will consider more revenue sources before making a final decision on the size of the bond, the people said.

Finance Minister Ken Ofori-Atta and a spokeswoman for Standard Chartered didn’t answer calls seeking comment. Fidelity Bank Managing Director Jim Baiden declined to comment when contacted by phone.

The cedi weakened 0.6 percent to 4.4538 against the dollar at 3:56 p.m. in the capital, Accra, the lowest since March 22. The yield on Ghana’s 2026 dollar bonds fell 7 basis points to 7.3 percent.

Ghana is selling the debt to clear arrears owed to banks by state-owned electricity and petroleum utilities. The seven-month old government of President Nana Akufo-Addo has vowed to boost banks’ ability to lend and accelerate growth after gross domestic product in West Africa’s second-biggest economy expanded at the slowest pace in 26 years in 2016.

Sovereign Guarantee

The stock of non-performing loans at banks was 8 billion cedis on June 30, according to Bank of Ghana data. The three major power utilities, Electricity Company of Ghana, Volta River Authority and Ghana Grid Company, had 7.7 billion cedis in payable loans at the end of 2015, according to the International Monetary Fund.

Some attendees at the Aug. 16 meeting were concerned that the bond won’t carry a sovereign guarantee and are seeking more assurances that the current and future governments will continue to allocate energy sector levies to the special purpose vehicle, said the people.

The ministry and advisers are said to be considering a maturity date of seven to 15 years. Bids are likely to open next month, with the arrangers seeking to place as much as 60 percent of the bond with foreign investors, said the people.

“The main stress in the economy right now is the banking industry, due to its non-performing loans,” Karl Ocran, head of investments at Frontline Capital Advisors Ltd. in Accra, said by phone. “The success or not of the energy bond in September is going to be a catalyst for the next waive of sentiment.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Crude Oil

Oil Prices Steady as Israel-Hamas Ceasefire Talks Offer Hope, Red Sea Attacks Persist

Published

on

markets energies crude oil

Amidst geopolitical tensions and ongoing conflicts, oil prices remained relatively stable as hopes for a ceasefire between Israel and Hamas emerged, while attacks in the Red Sea continued to escalate.

Brent crude oil, against which Nigerian oil is priced, saw a modest rise of 27 cents to $88.67 a barrel while U.S. West Texas Intermediate crude oil gained 30 cents to $82.93 a barrel.

The optimism stems from negotiations between Israel and Hamas with talks in Cairo aiming to broker a potential ceasefire.

Despite these diplomatic efforts, attacks in the Red Sea by Yemen’s Houthis persist, raising concerns about potential disruptions to oil supply routes.

Vandana Hari, founder of Vanda Insights, emphasized the importance of a concrete agreement to drive market sentiment, stating that the oil market awaits a finalized deal between the conflicting parties.

Meanwhile, investor focus remains on the upcoming U.S. Federal Reserve’s policy review, particularly in light of persistent inflationary pressures.

Market expectations for any rate adjustments have been pushed out due to stubborn inflation, potentially bolstering the U.S. dollar and impacting oil demand.

Concerns over demand also weigh on sentiment, with ANZ analysts noting a decline in premiums for diesel and heating oil compared to crude oil, signaling subdued demand prospects.

As geopolitical uncertainties persist and market dynamics evolve, observers closely monitor developments in both the Middle East and global economic policies for their potential impact on oil prices and market stability.

Continue Reading

Crude Oil

Oil Prices Sink 1% as Israel-Hamas Talks in Cairo Ease Middle East Tensions

Published

on

Crude oil - Investors King

Oil prices declined on Monday, shedding 1% of their value as Israel-Hamas peace negotiations in Cairo alleviated fears of a broader conflict in the Middle East.

The easing tensions coupled with U.S. inflation data contributed to the subdued market sentiment and erased gains made earlier.

Brent crude oil, against which Nigerian oil is priced, dropped by as much as 1.09% to 8.52 a barrel while West Texas Intermediate (WTI) oil fell by 0.99% to $83.02 a barrel.

The initiation of talks to broker a ceasefire between Israel and Hamas played a pivotal role in moderating geopolitical concerns, according to analysts.

A delegation from Hamas was set to engage in peace discussions in Cairo on Monday, as confirmed by a Hamas official to Reuters.

Also, statements from the White House indicated that Israel had agreed to address U.S. concerns regarding the potential humanitarian impacts of the proposed invasion.

Market observers also underscored the significance of the upcoming U.S. Federal Reserve’s policy review on May 1.

Anticipation of a more hawkish stance from the Federal Open Market Committee added to investor nervousness, particularly in light of Friday’s data revealing a 2.7% rise in U.S. inflation over the previous 12 months, surpassing the Fed’s 2% target.

This heightened inflationary pressure reduced the likelihood of imminent interest rate cuts, which are typically seen as stimulative for economic growth and oil demand.

Independent market analysts highlighted the role of the strengthening U.S. dollar in exacerbating the downward pressure on oil prices, as higher interest rates tend to attract capital flows and bolster the dollar’s value, making oil more expensive for holders of other currencies.

Moreover, concerns about weakening demand surfaced with China’s industrial profit growth slowing down in March, as reported by official data. This trend signaled potential challenges for oil consumption in the world’s second-largest economy.

However, amidst the current market dynamics, optimism persists regarding potential upside in oil prices. Analysts noted that improvements in U.S. inventory data and China’s Purchasing Managers’ Index (PMI) could reverse the downward trend.

Also, previous gains in oil prices, fueled by concerns about supply disruptions in the Middle East, indicate the market’s sensitivity to geopolitical developments in the region.

Despite these fluctuations, the market appeared to brush aside potential disruptions to supply resulting from Ukrainian drone strikes on Russian oil refineries over the weekend. The attack temporarily halted operations at the Slavyansk refinery in Russia’s Krasnodar region, according to a plant executive.

As oil markets navigate through geopolitical tensions and economic indicators, the outcome of ongoing negotiations and future data releases will likely shape the trajectory of oil prices in the coming days.

Continue Reading

Commodities

Cocoa Fever Sweeps Market: Prices Set to Break $15,000 per Ton Barrier

Published

on

Cocoa

The cocoa market is experiencing an unprecedented surge with prices poised to shatter the $15,000 per ton barrier.

The cocoa industry, already reeling from supply shortages and production declines in key regions, is now facing a frenzy of speculative trading and bullish forecasts.

At the recent World Cocoa Conference in Brussels, nine traders and analysts surveyed by Bloomberg expressed unanimous confidence in the continuation of the cocoa rally.

According to their predictions, New York futures could trade above $15,000 a ton before the year’s end, marking yet another milestone in the relentless ascent of cocoa prices.

The surge in cocoa prices has been fueled by a perfect storm of factors, including production declines in Ivory Coast and Ghana, the world’s largest cocoa producers.

Shortages of cocoa beans have left buyers scrambling for supplies and willing to pay exorbitant premiums, exacerbating the market tightness.

To cope with the supply crunch, Ivory Coast and Ghana have resorted to rolling over contracts totaling around 400,000 tons of cocoa, further exacerbating the scarcity.

Traders are increasingly turning to cocoa stocks held in exchanges in London and New York, despite concerns about their quality, as the shortage of high-quality beans intensifies.

Northon Coimbrao, director of sourcing at chocolatier Natra, noted that quality considerations have taken a backseat for most processors amid the supply crunch, leading them to accept cocoa from exchanges despite its perceived inferiority.

This shift in dynamics is expected to further deplete stocks and provide additional support to cocoa prices.

The cocoa rally has already seen prices surge by about 160% this year, nearing the $12,000 per ton mark in New York.

This meteoric rise has put significant pressure on traders and chocolate makers, who are grappling with rising margin calls and higher bean prices in the physical market.

Despite the challenges posed by soaring cocoa prices, stakeholders across the value chain have demonstrated a willingness to absorb the cost increases.

Jutta Urpilainen, European Commissioner for International Partnerships, noted that the market has been able to pass on price increases from chocolate makers to consumers, highlighting the resilience of the cocoa industry.

However, concerns linger about the eventual impact of the price surge on consumers, with some chocolate makers still covered for supplies.

According to Steve Wateridge, head of research at Tropical Research Services, the full effects of the price increase may take six months to a year to materialize, posing a potential future challenge for consumers.

As the cocoa market continues to navigate uncharted territory all eyes remain on the unfolding developments, with traders, analysts, and industry stakeholders bracing for further volatility and potential record-breaking price levels in the days ahead.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending