Accra, Nov. 23, GNA -In response to increasing needs
of funding projects in local currency, the African
Development Bank (AfDB) is proposing to issue and
list Ghanaian Cedi denominated bonds on the Ghana
Stock Exchange next year.
The aim is to use proceeds to finance commercially
viable private sector or non-guaranteed public
projects in the country with financial needs
starting from three million dollars.
Briefing journalists on the Bank's African Local
Currency Initiative, Mr Stefan Nalletamby, Treasurer
of the AfDB, said the bonds would be issued next
year once a viable project, which is run purely on
business lines was identified.
He said the bonds would provide long-term local
currency financing to support development projects
trough direct project lending or lines of credits to
financial institutions and helped eliminate foreign
exchange risk.
Besides the listing of the bonds are expected to
have ripple effects on the local capital market,
build the capacity relating to regulatory trading
and settlement infrastructure in line with
international best practice and eliminate currency
risk exposure for borrowers.
"The transaction is also expected to impact
positively on capital allocation and pricing,
enhance financial sector asset and liability
management by providing longer dated securities," Mr
Nalletamby said.
The AfDB officials are in the country to hold
discussions with local banks and various discount
houses, which have the expertise to play
facilitating roles in the process.
Mr Yaw Adu Kuffour, Senior Financial Analyst with
the Bank said, the African Local Currency Initiative
aimed to raise medium to long-term capital in the
currencies of regional member countries to fund the
bank's operations in these local currencies.
This is because local cost of projects is
increasingly becoming a significant component of
overall project cost.
He said the bonds would also give more investment
avenue to pension funds, insurance companies among
others to invest long-term to finance their future
needs.
The bank is adopting a two-pronged approach of
issuing debt either in the domestic debt market of
member countries or in the Eurobond market.
In October this year, the AfDB became the first
supranational borrower to issue a two-year bond
worth about 45 million dollars (equivalent of 414.9
billion cedis) linked to the Ghanaian Cedi.
Other experiences on the continent were with South
Africa, Botswana and Tanzania.
GNA
