Ghana Invites US Dollar Bondholders for Debt Exchange
As Accra continues to work its way out of debt pressures, Ghana’s finance ministry has invited eligible holders to exchange $809.9 million in domestic U.S. dollar bonds for a package of new bonds with lower rates and longer maturities.
The latest move is part of a restructuring debt plan to meet International Monetary Fund loan requirements.
The country’s cocoa board launched a debt securities exchange programme on the terms of the government’s exchange memorandum, under which it is inviting holders of its short-term debt securities to voluntarily offer to exchange their cocoa bills for longer-term debt securities.
The finance ministry’s statement confirms a draft memorandum seen by Reuters last month stating that the bonds would be replaced by four- and five-year bonds with interest rates of 2.75% and 3.25%.
In comparison, two old domestic U.S. dollar bonds with November 2023 and November 2026 maturities were issued at 4.75% and 6.00% respectively.
Cocoa bill holders, meanwhile, will receive five different bonds that will mature on a one-per-year basis from 2024 to 2028 included, COCOBOD said on Friday.
The cocoa bills represent an aggregate principal of around 7.93 billion cedis, equivalent to$699 million at the current exchange rate. It added that they would be converted into new bonds with a 13% yield.
The last cocoa bill issued in February 2023 had a yield of 32.22%.
The exchanges are part of efforts by Ghana to restructure both domestic and external debt – a condition set by the International Monetary Fund (IMF) for a $3 billion bailout secured in May.
Ghana concluded the first phase of its domestic debt exchange in February – with 85% of eligible bondholders participating – but needs new terms for another 123 billion Ghana cedi to qualify for the next tranche of the IMF loan to address its worst economic crisis in a generation.
The debt comprises domestic dollar bonds, cocoa bills, local currency bonds owned by pension funds, and debt owed to the central bank and independent power producers.
Due to a nearly 100% debt-to-GDP ratio, Ghana defaulted on most external debt in December,. It seeks to reduce its external debt interest repayments by $10.5 billion over the next three years. # Ghana Invites US Dollar Bondholders for Debt Exchange. #Ghana Invites US Dollar Bondholders for Debt Exchange#