Bloomberg News

Ghana’s 3-Year Borrowing Costs Climb Amid Low Foreign Interest

October 14, 2011

Oct. 14 (Bloomberg) -- Ghana’s three-year borrowing costs rose to the highest in more than a year at an auction yesterday where the bank allocated 51 percent of the bids, according to the central bank.

Ghana sold 200 million cedis ($123 million) of three-year bonds, less than the 300 million cedis offered, at an average yield of 14 percent, the Accra-based Bank of Ghana said today. Investors had sought 388.9 million, the bank said. The last sale of the same duration, held in July, was also undersubscribed and earned a yield of 13 percent.

“The limited foreign investor interest in the offering meant there was less competition in the bids,” Nalini Cundapen, a London-based emerging markets strategist at Societe Generale SA, said in an e-mail. “Locals may be increasingly aware of potential inflationary pressures in the pipeline and continuing uncertainty in fiscal dynamics going into next year.”

Ghana’s inflation rate has been unchanged at 8.4 percent for the past three months, the Ghana Statistical Service said Oct. 12, even as the cedi, has weakened against the U.S. dollar.

“We think the exchange rate being quoted on the interbank market is a bit of concern for the offshore investors,” Adams Nyinkau, head of treasury at the central bank, said by phone yesterday. The currency of West Africa’s second-biggest economy has slumped 9 percent against the dollar this year and was little changed at 1.6323 by 11:49 a.m. in Accra.

Ghana will hold presidential and parliamentary elections in December 2012. During the last campaign year in 2008, Ghana’s fiscal deficit widened to 14.5 percent of gross domestic product, “boosted by strong pre-election spending growth” including gas-price subsidies, infrastructure projects and wage increases for public workers, the International Monetary Fund said in July 2009.

--Editors: Emily Bowers, Ben Holland.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at

To contact the editor responsible for this story: Antony Sguazzin at

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