Ghana’s PPI inflation brakes to 4.4% y/y ahead of Eurobond sale

By bne IntelliNews September 24, 2015

Ghana’s annual producer price inflation plunged further in August, reaching a multi-year low of 4.4%, down from a revised 10.2% in July and 23.1% in June, provisional data from Ghana Statistical Service showed. The data, which suggests an easing pressure on the country’s stubbornly high consumer price inflation, should be welcomed by government and central bank officials, who are currently on a roadshow to market an up to $1.5bn Eurobond.

The upbeat PPI figures could help Ghana persuade investors to buy the securities at a lower yield. Already before the data release, analysts expected the bond to be sold at a yield below current market rates because of a $400mn guarantee provided by the World Bank’s International Development Association (IDA). The guarantee helped Ghana get a B1 provisional rating on the Eurobond by Moody’s, two notches above its B3 issuer rating.

According to Bloomberg, the yield on Ghana’s $1bn Eurobond due May 2023 has climbed 98bp this year to 10.14%, compared with 7.47% for similar-maturity debt of peer Nigeria.

Ghana’s government needs the proceeds from the Eurobond to retire maturing debts and finance projects outlined in the 2015 budget.

Producer prices in the manufacturing sector, which constitutes more than two-thirds of total industry, rose 4.1% y/y last month, decelerating from a 12.9% y/y growth in July. Prices within manufacture of coke and refined petroleum products, which have been driving inflation lower recently, dived 28% y/y, following a 6.4% y/y drop in July.

The annual inflation rate in the mining sector accelerated to 1.7% from 1.5%, and that in the utilities sector quickened to 8.4% from 7.3%.

Ghana’s monthly PPI deflation deepened to 3.4% in August from 1.5% in July.

Producer price inflation Aug 2015, y/y July 2015, y/y Aug 2015, m/m July 2015, m/m
Mining and quarriying 1.7% 1.5% 1.4% -18.3%
Manufacturing 4.1% 12.9% -5.3% 3.1%
Utilities 8.4% 7.3% 0.4% 0.1%
All industries 4.4% 10.2% -3.4% -1.5%
Source: Ghana Statistical Service        

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