GHȼ9.7b bond was above board – Ofori-Atta

Ken Ofori-Atta – Finance Minister

Mr Ken Ofori-Atta, Minister of Finance has stated that the GHȼ9.7 billion bond was issued in local currency and not denominated as dollar bond.

He said the recent bond issuance was transparent and any allegation of conflict of interest was borne out of lack of understanding of the transaction.

Mr Ofori-Atta made this known in response to a motion filed by Mr Haruna Iddrisu, the Minority Leader on March 31, on the $2.25 billion.

The Minority in Parliament recently raised concerns over the integrity of the country’s bond issue and accused the government of selling all of Ghana’s bond to one institution, Franklin Templeton.

According to the Minority there was conflict of interest in the issuance of the bond because one Trevor G. Trefgarne, who represented Franklyn Templeton, the company that bought a chunk of the bond issued in April was a director of Enterprise Insurance.

Enterprise Insurance also had the Finance Minister, Ken Ofori Atta as a director.

Mr Ofori-Atta said the bond like the previous ones were issued in a competitive and in a transparent bidding process, managed by the Joint Book Runners (JBRs), namely Barclays Bank Stanbic Bank and SAS, who were appointed in 2015.

He explained that as in normal practice since the book building process began in 2015, the JBRs announced the sale of the bond, as per the 2nd quarter Issuance Calendar.

Subsequently, the primary dealers who are mostly banks mobilised interested foreign and local investors to participate in the sale.

He said as part of the book building process, the JBRs sent emails indicating the details of the upcoming transaction, to all potential investors.

This is to inform them of the transaction in line with the normal practice.     

Mr Ofori-Atta also stated that external investors participated in the domestic medium term debt instrument of tenor, three years and above, since 2006.

He said all over the world, government securities were issued in a manner that was quite distinct from other forms of borrowing, and there were elaborate rules that governed the issue of bonds.

He assured the House that the Ministry of Finance did not deviate from the rules in the issuing of the seven -year and 15-year bonds, and re-opening the five and 10-year bonds for tap-in, with the view to building benchmark bonds and improving liquidity in those instruments.

Mr Ofori-Atta said the advantage of opening it up to foreign investors was to bring in their hard currency to purchase the bond in the local currency.

He said this had the positive impact of helping to strengthen the cedi. 

He said to-date out of the total amount raised, GHȼ2.5 billion had been used to re-profile the debt and GHȼ1.1 billion used to finance the budget.

Government would continue to use the remaining amount to re-profile short term maturing bills, he said.

Mr Haruna Iddrisu, Minority Leader speaking after the Finance Minister’s responses, stated that his side has not had adequate information as expected and called on the minister to be sincere and candid with the good people of Ghana.

He said the failure of the minister to provide detail information governing the controversial $2.25 billion bond vindicated him.

He said he had earlier on warned government that the bond had implications on the country’s debt profile as well as the future of the country.

“We asked for the utilisation of the bond and this is Parliament of Ghana, the people’s representatives, the Minister has accounted for $2.5 billion, where is the rest of the money,” the Minority leader queried.

He stated that the Minority was not questioning foreign participation in the transaction, they were only questioning the concentration risk, as a whopping 95 per cent of the bond issued by the Finance Ministry went to one entity known as Franklin Templeton.

Mr Haruna Iddrisu also pointed out that, the interest of the Minority was to prevent Ghana from being declared as debt distress country and that the Minister’s inability to furnish Parliament with the detail information requested for by the Minority would have a dire consequence for the country.

He said the Minority thinks the transaction was not done in a manner which was transparent to both participants and investors of Ghana and abroad.

He said the Minority would make its voice known soon after studying the documents the Minister presented to the House.

Mr Osei Kyei Mensah-Bonsu, Majority Leader in his response noted that securities market was more intelligent and clever than the minority’s accusation that was why they responded positively to the country’s domestic bond.

He said at the very onset issues were raised by the minority that the bond issuance did come to Parliament however those people have run away from that allegation.

He said recent GHȼ9.7 billion domestic bond went through the necessary processes in terms of transparency and no breaches in integrity during the transaction. 

Source: GNA

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