Ghana’s Bond Sale Is Test for African Issuers Amid Debt Woes

Ghana’s planned Eurobond sale will be a key test of appetite for African issuers after a raft of nations sought debt relief, shaking investor confidence, Bloomberg News reported. Strong demand for the sale, which includes Africa’s first zero-coupon dollar bond, would encourage other African countries to tap international capital markets for money needed to roll over debt and finance strained budgets. That would also sidestep the need to seek debt relief and the questions that raises over market access, according to Gemcorp Capital LLP. The so-called common framework put together by the G-20 with support from the International Monetary Fund grants developing countries debt-service suspension to help weather the coronavirus pandemic. But bondholders are concerned about being forced to provide similar relief. “Strong demand for Ghana would clearly highlight the region’s ability to have continued access to international capital markets and avoid the uncertainty,” Simon Quijano-Evans, chief economist at London-based Gemcorp, said in a note to clients. “The long-awaited Eurobond auctions will not only be salient for Ghana itself but for the region as a whole, opening the door for other issuance.” Ghana's Eurobond yields have climbed from record lows Kenya and Angola are among African nations that may follow Ghana’s lead, Quijano-Evans said. Read more.