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GuarantCo and Quantum Terminals' Credit-Enhanced Corporate Bond Case Study

Convergence

GuarantCo is a donor-funded entity that was established in 2005 to catalyze local currency investments into infrastructure projects and to develop local capital markets using guarantees. To date, GuarantCo has provided over $1.1 billion in financing alongside $4.3 billion in private sector capital to over 50 projects across Africa and Asia. In 2017, GuarantCo supported Quantum Terminals (QTL), a local fuel and energy infrastructure developer in Ghana that specializes in providing storage solutions for the Liquefied Petroleum Gas (LPG) sector. The company plays a key role in supporting Ghana’s mission to provide 50% of its population with access to LPG by 2020.

In 2018, Quantum Terminals issued a credit-enhanced local currency bond for $10 million (GHS 45 million) to expand its operations. The bond received a partial (75%) guarantee from GuarantCo and was fully subscribed by local institutional investors. In 2018, the corporate bond was listed dually on the Ghana Stock Exchange (GSE) and the London Stock Exchange (LSE), representing the first corporate bond from Ghana to list on the LSE. The design and fundraising of Quantum Terminals’ corporate bond presents useful insights for others looking to issue or invest in local currency bonds. These include:

  • Corporate bonds are a viable path for local companies looking to raise additional financing from new investors
  • Guarantees can help reduce local currency risks for projects, crowd-in private sector investors, and develop local capital markets
  • Specialized blending vehicles like GuarantCo allow their financiers to achieve greater and more efficient market reach
  • Building international appetite for local currency markets in Africa will take time and repetition
    Date
    29 Oct 19
    Type
    Case Studies
    Region Focus
    West Africa, Sub-Saharan Africa
    Sector Focus
    Energy
    Sub-Sector Focus
    Non-Renewable Energy