By Toma Imirhe
Last week the very first Commercial Paper to be listed on the Ghana Fixed Income Market was issued. The issuance was by Federated Commodities Ghana, one of the biggest licensed cocoa buying companies in the country, and is worth GHc72.5 million, the first part of a GHc200 million CP issuance programme approved by the Securities and Exchange Commission and the Ghana Stock Exchange under shelf registration, which will allow the company to issue a further GHc127.5 million in tranches over a stipulated time frame.
The transaction was facilitated by First Atlantic Bank Ghana, First Atlantic Brokers, Deloitte Ghana, G.A. Sarpong & Co, Glico General, GCB Bank PLC, the Central Securities Depository (CSD), and Beacon Ratings.
Ghana’s listed Commercial Paper (CP) programme was formally launched by the GSE in May last year, although it has taken close to a further one year for the first one to be listed. However it is by no means the first CP to be issued in Ghana’s money market – over the years unlisted CPs have served as a means by corporates for raising short term financing quickly without underpinning collateral nor the need for detailed loan documentation and covenants. But this has also dissuaded many portfolio investors from subscribing to CPs which they see as too risky, since investors lack comfort or recourse in the event of a payment default.
This persuaded the GSE and SEC to design a formalized framework for the issuance of CPs in Ghana, which was launched nearly a year ago. Under the framework a CP may be interest bearing or issued at a discount to face value as may bedetermined by the Issuer; shall only be redeemable at maturity and therefore cannot be discounted before the end of its tenor;and shall have an investment grade rating issued by a Credit Rating Agency.
Fedco, the issuer of last week’s landmark CP is the 3rd largest LBC and now commands a 10.5% share while its activities affect 70,000 farmers and over 400,000 lives nationwide.
The inability of COCOBOD to secure further versions of its annual international syndicated bank loan since the last cocoa crop season has forced LBC’s in Ghana to collaborate with the international buyers themselves to finance purchases from local farmers – Fedco claims that it and its international buyers between them now have a US$20 million (over GHc300 million) purchases portfolio outstanding – and this in part explains its need for increased short term funding. Besides this the company is now expanding beyond cocoa into logistics, commodity trading, and food processing, with an 18,000-metric-ton rice mill in Kampung Dari and a food processing facility underway.
Last week’s milestone issuance and the potentials it holds with regards to short term financing at lower than prevailing direct bank lending rates has brought new enthusiasm to Ghana’s debt-financing needy corporates at a time that the commercial banking industry is still struggling to shrug off the effect of government’s recently implemented Domestic Debt Exchange Programme on its balance sheet quality, cash flow and consequent willingness to lend.
Speaking at the issuance event, Abena Amoah, Managing Director of the GSE, expressed her enthusiasm about the advent of listed CPs in Ghana “This first-of-its-kind issuance showcases the Commercial Paper Market’s potential to unlock new, flexible financing options for businesses. It’s encouraging to witness a corporate entity seize this opportunity, and we anticipate many more to follow.
“This landmark issuance underscores the effectiveness of the Commercial Paper Market in providing businesses with alternative short-term financing opportunities. We are excited to see
forward to more corporate issuances in the coming months.”
Echoing this sentiment, FEDCO’s Managing Director, Maria Adamu-Zibo, reflected on the broader impact of the move: “Being the first to issue a Commercial Paper on the GFIM is not just a financial achievement—it’s a powerful endorsement of Ghana’s capital markets. It speaks to our confidence in the system and our ongoing commitment to the communities we serve.”
Special Guest of Honour at the event, John Awuah, who is the CEO of the Ghana Association of Bankers, highlighted the significance of the transaction as a foundational benchmark: “This initial issuance is a litmus test for the future. Ensuring timely repayment will be key to earning the trust and confidence of investors going forward.”
