GT bonds trade higher •Than the eurobond

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Gt Bond (fin)



Story: Boahene Asamoah

THE announcement of the take-over negotiations between Vodafone and Ghana Telecom (GT) has triggered a sudden interest in its bonds on the international financial market.
Information gathered from the international media show that since June this year, the price of the sovereign bond has declined, while the price of the GT bond has increased during the same period.
A sovereign bond is a debt security issued by a national government within a given country, while a corporate bond such as the GT bond is issued by corporate organisations to raise long-term debt financing.
According to analysts, the price increase was due to the perception that the current ongoing negotiation with vodafone would eventually lead to a deal favourable to GT.
Analysts also believe that the reason for the sudden interest in GT bonds by investors was due to the creditability and the financial muscle of Vodafone as well as in its image on the international market.
Graphs from Bloomberg indicate that the GT bond was trading on the international market much higher than the Ghana sovereign bond
The last recorded yields of the GT bond was 8.021 per cent, while that on the sovereign bond was slightly higher at 8.32 per cent.
In effect, GT was trading at a better yield than that of the Government of Ghana (GoG).
According to market watchers, there was, however, a caveat.
That the GT yield reflects a five-year instrument with an even much shorter average life of between two-and-a-half to three years.
According to the analyst, the maturity of the GoG bond is 10 years. For the same maturity or average life as the GT bond, the GoG bond would probably trade much lower than GT.
Reports from JP Morgan show they were arranging for the refinancing of the GT bond.
GT floated bonds worth $200 million from the international market last year to finance its projects in the country.
The GoG last year also sourced a sovereign bond worth ¢1.2 billion, which was oversubscribed.

Caption: a graph depicting the appreciation of GT bond on the international market.