Government launches restructuring offer for US$13 billion of its bonds

Government on Thursday invited holders of roughly US$13 billion of its international bonds to swap their holdings for new instruments, more than two months after reaching a preliminary restructuring agreement with two bondholder groups.

Bondholders have until 30 September to accept the offer though those who agree to do so before an early deadline on 20 September will be eligible for a 1% consent fee, the government said in its “exchange offer and consent solicitation” published in a regulatory statement on the London Stock Exchange.

Government defaulted on most of its US$30 billion of international debt in 2022, as the strain of the COVID pandemic, war in Ukraine and higher global interest rates tipped it into crisis.

It is overhauling its debt under the G20 Common Framework, which has seen Zambia and Chad also reach agreements. Ethiopia is expected to be next, but the setup has been widely criticised for being slow and cumbersome.

A committee of Ghana’s international bondholders said in a statement that it supported the restructuring offer. It said it was important for Ghana to sustain economic reforms to eventually regain access to international financial markets.

A regional group representing holders of over 25% of the bonds said in a statement they too supported the offer, adding that they will “continue to invest and contribute towards creating a more dynamic economy”.

Bondholders will have the chance to swap their holdings for a so-called “disco” bond, offering an interest rate of 5% climbing to 6% after mid-2028, and with maturities across three instruments ranging between 2026-2029.

That option will come with a writedown of principal of 37%.

The second is a par bond option capped at US$1.6 billion with three instruments, of which the main one will pay a coupon of 1.5% and mature in 2037 with no haircut apart from a writedown of past due interest. The offer will last for 21 days.

The agreement will see Ghana’s bondholders forego about US$4.7 billion of their loans and provide cash flow relief of about US$4.4 billion up until 2026 when the country’s current International Monetary Fund programme ends.

Godfred Bokpin, an economist and finance professor at the University of Ghana, said Thursday’s announcement was an important milestone in the country’s restructuring efforts.

“With this, investors now have a fair understanding of their losses and they can move on,” he told Reuters.

The new bonds will be issued on Oct. 9, the government statement said. Holders of the Ghana 2030 international bond that was partially guaranteed by the World Bank and is also part of the restructuring would receive their guarantee payment the same day or as soon as possible thereafter.

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