The Ministry of Finance issued an invitation last Friday to qualified holders of domestic notes and bonds worth about US$809 million to exchange them for a package of new bonds.
The invitation, a follow-up to the Domestic Debt Exchange Programme (DDEP) that was established in December 2022, is intended to assist the government in achieving its goal of controlling its public debt, according to a statement from the ministry.
“The successful completion of this programme will allow our country to restore sound public finance and sustainable debt levels, and to kick-start economic growth following impacts of the COVID-19 pandemic and global economic shock created by the war in Ukraine,” It said.
The invitation will expire on July 28, 2023, unless it is extended or revoked earlier by the government at its sole discretion. It is only available to registered holders of qualified U.S. dollar-denominated instruments. The settlement date is planned on August 4, 2023, with an extension conceivable under specific circumstances.
The bonds include the following with these international securities identification numbering (ISIN) numbers: GHGGOG061730, which has a maturity date of November 13, 2023, and an outstanding principal amount of US$260,011,543; GHGGOG061748, also maturing on November 13, 2023, with an outstanding principal amount of US$202,893,638; GHGGOG064916, maturing on November 19, 2026, and the outstanding principal amount associated with it is US$84,633,381; and GHGGOG064908, with a maturity date of November 19, 2026, and an outstanding principal amount of US$261,450,655.
Holders who have their offers accepted will get new benchmark government bonds with the same aggregate principal amount as their original bonds, denominated in U.S. dollars. Compared to the qualifying bonds, the new bonds will have a longer average maturity and a lower average coupon.
The new 2027 bond and the new 2028 bond will each get an equal share of the distribution of the new bonds.
Different maturity dates (2027 and 2028) and yearly interest rates (2.75 per cent and 3.25 per cent) are attached to these new bonds. From February 2024 until the date of maturity, interest will be paid in arrears on a semi-annual basis. According to the finance ministry, the principal on both bonds will be returned in full on the dates of their respective maturities.
It is hopeful of reaching levels similar to the last exercise, which saw almost 85% of eligible holders participate and surrender their bonds and notes, resulting in a total exchange of GH83 billion.
The government is optimistic that the current invitation will be as successful, emphasizing the significance of complete participation by all qualified holders.
“The successful completion of this domestic debt exchange is a critical component of both the debt reduction programme and programme discussions with the International Monetary Fund (IMF); it will contribute to unlocking support from the international community and allow Ghana to achieve its debt targets. As such, government calls for full participation by all holders of eligible bonds,” a portion of the statement read.
“Government expects overwhelming support for this exchange. The alternative would be a far worse economic crisis, with protracted closure from international markets (including imported goods and services) and further domestic economic instability – both for the real economy and the financial sector. It would also mean depleted fiscal resources to support the vulnerable,” it concluded.
Source:b&ft
