Govt to launch Eurobond debt exchange next week – Dr Adam

GHANA will invite investors holding its Eurobonds to exchange their existing bonds for newly-reissued ones next week in a step towards completing its extensive debt restructuring.

The bond exchange process, which is expected to last for 21 days, is crucial to the country’s efforts to stabilize its economy and normalize its relationship with international bond markets.

Finance Minister Dr Mohammed Amin Adam expressed optimism about the exchange, stating that its successful completion would be a major milestone in resolving Ghana’s $30 billion debt crisis.

He urged all bondholders to fully participate in the offer, emphasizing that the restructuring of the Eurobonds is essential for the country’s economic recovery.

Ghana’s negotiations with international investors, who hold about 40% of the country’s $13 billion in defaulted Eurobonds, began in mid-March.

These discussions have resulted in an interim deal involving two major groups: a consortium of Western asset managers and hedge funds, and a group that includes regional African banks.

$4.7bn in Eurobond debt cancelled

The restructuring of $13.1 billion in Eurobond debt has led to the cancellation of $4.7 billion (GH₵65 billion), marking a 37% effective nominal haircut, an increase from the initial 33% offer.

This includes $1.5 billion in principal savings and $2.9 billion in interest savings.

$4.4bn in debt service relief

Ghana will save $4.4 billion (GH₵60 billion) in debt service, providing crucial financial relief as part of its ongoing International Monetary Fund (IMF) program.

$2.8bn relief on bilateral debts

An agreement with bilateral debt holders, covering $5.4 billion, will provide cash flow relief of approximately $2.8 billion (GH₵39 billion) in deferred debt service payments from 2023 to 2026.

These payments will be repaid later at a lower interest rate.

Ghc203bn DDEP

The domestic debt restructuring saw GH₵203 billion exchanged, resulting in debt service savings of GH₵61 billion over 2023.

The programme achieved a high participation rate of nearly 95%.

Reduction in domestic coupon rates

As part of the domestic debt restructuring, coupon rates on local bonds were reduced from an average of 21% to 9%, and maturities were extended.

This move significantly eased Ghana’s near-term debt service burden, which previously consumed more than 40% of the country’s tax revenues.

The Finance Minister’s announcement marks a critical phase in Ghana’s efforts to restructure its debt and restore economic stability.

The successful execution of the Eurobond exchange will be a key indicator of the country’s progress in overcoming its debt challenges and rebuilding investor confidence.