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Company News from Saturday, February 2, 2019
Source: bloomberg.com
2019-02-02
Eric Otoo
Ghana will start a debt sale next month to support lenders as authorities seek to finance 2 billion GH ¢ ($ 403 million) in favor of undercapitalized banks.
The government has created a special vehicle called Ghana Amalgamated Trust, or GAT, which will use proceeds from the sale of debt to buy shares of five lenders and help them reach the minimum capital threshold of 400 million GH.
GAT will pay investors a unique annualized rate of 21% when bonds mature after five years, said general manager Eric Otoo during an interview in the capital, Accra. GAT will then seek out badets through buybacks or listings at the local stock exchange, he said.
The creation of GAT and the sale of its debt come in the final phase of a clean-up of the sector in which the lenders had to increase their capital, a process which made it possible to reduce the number of banks by almost one third to 23. .
The reforms announced in September 2017 triggered a series of efforts to raise capital while the government issued 9.8 billion GH ¢ of bonds to cover the liabilities of poorly managed lenders and protect depositors' funds. .
The five lenders who will receive GAT funding have not reached the capital threshold but are well managed, Otoo said.
The beneficiaries are the National Investment Bank, the Agricultural Development Bank, UMB Bank Ltd., Prudential Bank Ltd. and the entity resulting from the merger of BSIC Ghana and Omni Bank Ltd.
"It's an arrangement to save the system, save the situation and allow the banks involved to pay back some time," Otoo said.
A roadshow for the sale of debt will begin Feb. 18, said Mr Otoo. The government will guarantee 70% of sales, according to the Ministry of Finance.
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