ACCRA (Reuters) – Ghana is holding off on plans to issue a five-year domestic bond this month due to “recent market developments”, the Finance Ministry said on Friday, the latest setback after the government recently cancelled similar bonds.
Finance Minister Seth Terkper earlier this month announced the government’s plans to issue the bond to raise 500 million cedis ($127 million) in an effort to help restructure its growing debt.
But in a statement on Friday, the ministry said the issuance had been postponed, adding that it would keep markets updated with any developments on the transaction.
It did not explain the postponement, but analysts say uncertainties over the country’s economic outlook had rendered its long-term domestic debt unattractive to investors.
Ghana, which exports cocoa, gold and oil, is currently under a three-year aid programme with the International Monetary Fund to stabilize the economy, dogged by stubborn deficits, high public debt and quickening inflation.
“It was going to be difficult for the book-builders to convince risk-averse investors to participate in a five-year cedi bond at this time when they are not certain of the immediate future path of the economy,” an Accra-based fund manager said.
The West African country is also grappling with a prolonged energy crisis that has crippled industries, leading to stunted economic growth and angered voters ahead of elections next year.
The government cancelled a seven-year domestic bond planned for April this year. It last year called off advertised five-year auctions to avoid exorbitant yields on the debt.
Yields on government debt have been on the rise in the last three years. On Friday, the rate for Bank of Ghana’s benchmark 91-day bill rose to 25.2287 percent from 25.2129 percent a week ago.