Bloomberg reports that Ghana’s Eurobonds have surged 93% since last November and may continue to rise given the country’s increasingly attractive fiscal position due in part to the production of a new oil field that is expected to put it in the world’s top 50 oil producers and to expand growth from an estimated 4.1% this year, to 6.1% in 2010 and 10.5% the year after. The yield on the 8.5% dollar-denominated bonds due 2017 fell from 9.83 to 9.73 percent during trading on Tuesday.
Ghana was the first post-HIPC (Heavily Indebted Poor Country) debt relief country to access the international capital markets, after being assigned a favorable credit rating of B+ in 2007 by the Fitch, the global rating agency. While a slew of other African nations such as Kenya, Tanzania and Nigeria lined up in response, capital markets and risk appetite shriveled during the ensuing global credit crisis, and Ghana also had to shelve a $300 million bond last September due to poor reception. And in May, another ratings firm, Standard & Poor’s, warned of more African downgrades later this year, giving a “negative outlook” to seven out of the 19 African sovereigns it rates: Ghana, Madagascar, Nigeria, Senegal, South Africa, Botswana and Seychelles.
Yet a subsequent rise in global markets–fueled by a commodity rally and narrowing spreads, may have tempered that gloom. In Ghana’s case, the oil announcement, coupled with IMF and World Bank largesse, combined to give a rosier picture of the country’s balance of payments.