Ghana abandoning Eurobond sale, mulls syndicated loans

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Ghana is considering raising money through private bank loans, abandoning plans to sell as much as $1 billion of Eurobonds on concern its inability to raise targeted budget revenue may spark an investor selloff.
With-lower-than-expected oil prices, the government can’t raise all the revenue needed to meet the budget gap, the Ministry of Finance said in a statement on its website. That may worry investors in Ghana’s Eurobonds and prompt them to demand higher yields.
Ghana is trying to reduce its budget deficit to 5.3 percent of gross domestic product this year from 6.7 percent last year, based on crude prices averaging $53.05 a barrel. The finance ministry has proposed cutting the benchmark oil price in the budget to as low as $35 a barrel, it said in the statement.
The world’s second-biggest cocoa producer agreed to an almost $1 billion International Monetary Fund program in April 2015 as cocoa output declined and prices of commodities including gold fell. The program was intended to help rein in the budget deficit, which topped 10 percent of GDP for a third year in 2014, and halt declines in the currency.
The cedi has strengthened 0.1 percent against the dollar this year.

Maturing Bonds
The proceeds from syndicated loans will also be used to refinance dollar bonds maturing in October 2017, with a $531 million balance outstanding, the ministry said. Private loans would be sought in combination with multilateral and bilateral facilities, according to the
government.
A balance of $257 million available from last year’s
Eurobond proceeds and past oil revenue savings currently amounting to $105 million will also be used to refinance the 2017 maturities.
Ghana will still sell a
Eurobond if oil prices rise, the Finance Ministry said.

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