Drawing from my experience in capital markets at Stanbic Bank Ghana, including Eurobond dealings, I explain these instruments, relevant to Ghana’s debt market post-DDEP.

a) Distinction Between a Bond, Note, and Commercial Paper:

• Bond: Long-term debt security (typically >10 years) issued by governments/corporates, paying periodic interest (coupon) and principal at maturity; secured or unsecured, e.g., Ghana’s Eurobonds.
• Note: Medium-term debt (1-10 years), similar to bonds but shorter tenure; often unsecured, used in Euronote facilities, with flexible terms like floating rates.
• Commercial Paper: Short-term unsecured promissory note (<1 year, often 30-270 days), issued by high-credit entities for working capital; discount-based, no coupon, e.g., sterling CP in money markets.
• Key Differences: Tenure (bond long, CP short), security (bonds may be secured, CP rarely), and market (bonds secondary-traded, CP money market). In Ghana, BoG regulates via Securities Industry Act, 2016 (Act 929); CP aids liquidity, bonds fund infrastructure.

b) Key Characteristics of Bonds:

• Maturity and Tenure: Long-term, e.g., 10-30 years, providing stable funding.
• Interest Payments: Fixed or floating coupons, paid semi-annually; e.g., Ghana’s 2023 bonds at 8-10%.
• Principal Repayment: Bullet (at maturity) or amortizing; redeemable early via calls.
• Security: Secured (e.g., asset-backed) or unsecured (debentures); ratings influence yields.
• Negotiability and Marketability: Traded on exchanges, with liquidity; trustees protect holders under trust deeds.
• Regulatory Aspects: Governed by prospectuses, Unfair Contract Terms Act influences exclusions. In Ghana, post-DDEP exchanges highlighted restructuring risks, with BoG ensuring compliance for investor protection.