Domestic Bonds

Ghana sells sustainable bonds, the first social debt for education in Africa

Ghana plans to raise up to $ 1 billion through the sale of sustainable bonds, including Africa’s first social debt to fund a flagship policy to expand access to education.

The proceeds from the sale would help refinance domestic debt used for social and environmental projects, including loans taken to pay for the government’s free high school policy, Finance Minister of State Charles Adu Boahen said on Monday. at Bloomberg.

The use of social bonds has exploded since the coronavirus pandemic, but so far only a few sovereign issuers have sold them, including Chile and Ecuador. The European Union has become the main actor, to finance an employment recovery program, breaking the global debt require registrations in the process as investors flock to ethical assets.

“With this problem, we are looking to refinance these debts already raised to undertake projects in the environmental and social sectors,” said Adu Boahen. “Of everything we’re going to raise with our mandate in the capital market this year, only $ 1.5 billion is new debt, the rest is for refinancing or buyout.”

The sale, likely to be a mix of social and green bonds, would come months after the sale of Ghana for four years zero-coupon debt to international investors in a $ 3.025 billion Eurobond transaction that also included 20-year, 12-year and 7-year securities. The country has mandated Bank of America Corp., Citigroup Inc., Standard Chartered Plc, Standard Bank Group Ltd. and Rand Merchant Bank Ltd. as the main organizers of the operation.

The government will use some of the same advisers for the issuance of sustainable bonds, Adu Boahen said, without giving further details.

This will help plug in a budget deficit in Africa’s largest gold producer, which should represent 9.5% of gross domestic product this year, against 11.7% in 2020. The administration of President Nana Akufo-Addo had to increase the number of seats in public high schools since its creation and implementation of free education at this level in 2017.

(Updates with quote from Adu Boahen in fourth paragraph.)