Ghana’s international bondholders could lose up to 30% due to debt restructuring

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Ghana said it will ask holders of its international bonds to accept losses of up to 30% on principal and waive some interest payments.

This is in line with the country’s debt sustainability plan that it is drawing up in a bid to qualify for an International Monetary Fund (IMF) loan.

This was revealed by John Kumah, Vice Minister of Finance, during an interview with a local radio station.

Contradictory movement: Interestingly, Kumah’s confirmation comes four weeks after President Nana Akufo-Addo vehemently said refused speculation that some investors may lose money due to ongoing negotiations.

Instead, he insisted that the Ghanaian government was taking all necessary steps to protect investor profits amid ongoing negotiations with the IMF.

The news continues after this announcement.




The backstory: After being locked out of international debt markets due to the sell-off of its dollar bonds that pushed yields to troubled levels, Ghana is currently negotiating a $3 billion program with the IMF. This year, the cedi has been the world’s worst performer against the dollar, raising the cost of servicing loans.

The government is considering three-year suspensions of interest payments on foreign bonds and principal reductions. According to Kumah in the transmission, national debt investors will have to exchange their current values ​​for new ones that could offer a zero coupon in the first year, 5% in the second year and 10% in the third year.

The news continues after this announcement.


The debt restructuring is aimed at helping Ghana meet the sustainability requirements to qualify for the IMF bailout it has been negotiating since September and possibly reaching a staff-level deal with the Washington-based lender to end of year. The government has set up a committee to initiate “behind-the-scenes engagement” with bondholders, Kumah told Joy FM.

For the record: Yields on Ghana’s $1.2 billion 2032 Eurobonds fell 41 basis points on Thursday to 30.49%. The premium investors demand to hold US dollar bonds instead of US Treasuries was 3,008 basis points, well above the 1,000 level that is considered distressed.

Fitch Ratings would likely lower the country’s long-term issuer default rating to RD, one notch above default, from CC, if the debt is restructured as part of talks with the IMF, he told Bloomberg in an interview on last month.

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