IFC, AfDB set to issue bonds on Ghana market

The International Finance Corporation is to issue bonds on the Ghana Stock Exchange (GSE), and give some of the proceeds out as loan to the Ghanaian government and the rest used to fund development projects in the country.

The corporation is expected to make its first issue as soon as it has concluded discussions and sought approvals from all the relevant regulatory institutions, including the Securities and Exchange Commission (SEC).

The Managing Director (MD)of the GSE, Mr Kofi S. Yamoah, disclosed this at a press briefing in Accra.

He added that the exchange was also in discussions with the Africa Development Bank (AfDB) on a similar thing and expressed the hope that such negotiations would end positively for the bank to use the local bourse to raise funds to support its development agenda.

“The discussion with the IFC is almost concluding. They have submitted their applications to us, the SEC, the Bank of Ghana and other regulatory bodies and indications are that they’ll start anytime soon,” Mr Yamoah said in an interview after the briefing.

The press briefing was to update the media and the public on the activities of the GSE for the first quarter of the year.

It will, henceforth, be organised on quarterly basis to update the media on stock market activities, according to the Head of Marketing and Public Relations at the GSE, Mrs Diana Okine.

A successful issuance of bonds by the IFC, a member of the World Bank Group, as hinted by the MD of the GSE, would make the corporation the first international institution to raise capital through bonds on the GSE.

Although the bourse currently trades in both government and corporate bonds, interest in the corporate bonds has dwindled over the years, causing the exchange to rely only on the government’s short and medium term bonds.

The bond market has also remained under explored as government intermittently issues two, three, five or seven year bonds to restructure its debts and support infrastructure development, among others.

Thus, indications are that the coming on board of the IFC and, hopefully, the AfDB, would help attract other corporate institutions, especially the local ones, to sell bonds in return for capital.

The deputy Managing Director (DMD) of the GSE, Mr Ekow Afedzie, also said at the press briefing that the Ghana Alternative Market (GAX) would be launched next month to serve as an alternative market for less endowed companies to raise funds for expansion through the capital market.

He said all the parameters had been defined and the hurdles cleared for the market to go live.

Companies wishing to use the market are expected to have existed for at least one year, had a minimum capital of GH¢250,000 as at the time of their listing and their public float should be a minimum of 25 per cent of the total number of shares.

However, those seeking admission to the GAX need not to have recorded profits historically “but must have the potential to make profit, at least, at the th end of their third year of listing,” a brochure on the new market said.

Source: Daily Graphic