Ghana: Letshego Receives Bank of Ghana Approval for GH¢200 Million Bond Issuance

Letshego Ghana has received approval from the Bank of Ghana (BoG) for the issuance of GH¢200 million in corporate bonds, according to Poelo Mkpayah, the company’s Chief Financial Officer. This move is part of Letshego’s efforts to extend micro-credit services to individuals and businesses in Ghana. The company has already disbursed GH¢13.6 billion to 5.6 million customers, with an average of 194,000 daily transactions.

Mkpayah provided an update on the status of the facility during a “Facts behind the Figures” session hosted by the Ghana Stock Exchange (GSE). She explained that the only remaining step before coming to market is obtaining final approval from the capital market regulator, the Securities and Exchange Commission (SEC).

“We have received BoG approval to issue an additional GH¢200 million… We are currently going through SEC approval and will definitely be coming to the market soon,” she said.

If successful, this issuance will bring the total funds raised by the company through the Ghana Fixed Income Market (GFIM) of the GSE to GH¢500 million, strengthening its operations.

After receiving SEC approval, Letshego will embark on a roadshow to engage with partners who have supported the company in recent years, according to Nii Amankra Tetteh, Country Chief Executive.

This announcement aligns with GSE’s efforts to promote the listing of approximately 36 new corporate bond issuers on the Ghana Fixed Income Market (GFIM) over the next five years, aiming to provide long-term funding opportunities for the private sector.

Regarding bond ratings, Mr. Tetteh mentioned that the company’s bond ratings have improved following a recent review. It is now rated as ‘BBB-‘ with a stable outlook, compared to the earlier rating of ‘BBB-‘ with a negative outlook. These ratings reflect the company’s financial health and performance.

Abena Amoah, Managing Director of GSE, expressed her satisfaction with Letshego’s bond ratings and encouraged other corporate issuers to undertake rating services to boost market confidence. She emphasized GSE’s commitment to making bond ratings a common practice in the market.

In the review of the year 2022, the Domestic Debt Exchange Programme (DDEP) led to a decrease in pre-tax profit, from GH¢55.2 million in the previous year to GH¢7.52 million, primarily due to a GH¢30.9 million reduction in cedi and US dollar-denominated instruments. However, the company remains well-capitalized, ending the year with a capital adequacy ratio (CAR) of 16 percent, well above the 10 percent floor.

In the first half of this year, customer deposits reached GH¢81 million, with a pre-tax profit of GH¢18.3 million. Letshego is cautiously optimistic for 2024, with plans to expand into the informal sector and introduce new products, particularly in areas such as green and agricultural financing. The company is also focused on environmental, social, and governance (ESG) issues to align with global standards and ensure sustainable growth.