Ghana plans to issue a $2 billion syndicated bond before the end of 2016 to pay the debts of three public power supply companies, Reuters reported on June 7, citing official sources. 

“The lion’s share of the proceeds of the bond was meant for Volta River Authority (VRA), with the rest spread between GRIDCo and the Electricity Company of Ghana,” Thomas Akabzaa, Chief Director at Ministry of Petroleum.

“What we are trying to do as a government is to put all the debt into one portfolio. The three institutions all have big legacy debts hovering around $1.5 billion,” he added indicating that “the bond will be discussed before the end of the year, certainly”.

Mr Akabzaa also said discussions were already ongoing with banks that should be part of the syndicate in charge of the operation. These include Standard Bank Ghana, Ecobank and Standard Chartered Bank.  

Issuance by syndication is, beside tender, one of the methods through which debt securities can be issued. While tenders are traditionally used for issuances by governments, issuances by syndication are mainly used by private or public companies, as well as local collectivities or supranational institutions.

By issuing a syndicated bond, one gets better rates and insures liquidity via banks’ participation. These are indeed forced to buy bonds which are subscribed by investors.