Domestic Debt Exchange Programme deadline extended to Feb. 7… with new offer to encourage individual bondholders to sign up

The government yesterday extended the deadline for the Domestic Debt Exchange (DDE) programme to February 7, with new offers to en­courage all individual bondholders to sign up.

According to the Ministry of Finance (MoF) a new settlement date of February 14, would be confirmed via a revised and final Exchange Memorandum to be released tomorrow.

This is the third time the govern­ment is shifting the cutoff date for the DDE since it was announced on December 5, last year as part of preparations to access support from the International Monetary Fund (IMF).

A statement issued by the MoF said all individual bondholders below 59 years would now be of­fered instruments with a maximum maturity of five years, instead of 15 years, and a 10 per cent coupon rate.

For all retirees (including those retiring in 2023), it said, would be offered instruments with a maximum maturity of five years, instead of 15 years, and a 15 per cent coupon rate.

The statement said the new offers would affirm that all indi­vidual bondholders are free not to participate.

However, it reminded bondhold­ers that upon a successful DDEP, there would be very few of the ‘old bonds’ in circulation, and likely limit its tradability.

“With this, Government encour­ages all stakeholders to participate in the DDEP, an essential step towards meeting our debt sustain­ability targets and restoring macro­economic stability and economic growth,” the statement said.

The new arrangement followed a series of engagements with the In­dividual Bondholders Forum (IBF) which had requested an exemption from the DDE and had asked its members not to sign up.

The statement said the new arrangements were based on the agreement reached with the Ghana Association of Banks (GAB), Ghana Insurers Association (GIA), and the Ghana Securities Industry Association (GSIA).

Ghana in December last year reached a staff-level agreement with the IMF on economic policies and reforms to be supported by a new three-year arrangement under an Extended Credit Facility (ECF) of about US$3 billion.

The approval by IMF manage­ment and the Executive Board in the period ahead is contingent on receiving financing assurances from Ghana’s partners and credi­tors. Ghana is targeting to get the approval by March this year.

The government, on January 16, extended the deadline for the Debt Exchange Programme to yesterday, January 31, to enable it build con­sensus for the programme.

The extension, which was the second since the domestic debt exchange programme was launched on December 5, last year, followed a request for exemption by several groups of individual bondholders.

The individual bondholders were invited to the amended programme after labour unions threatened the government with industrial action to exempt pension funds from the programme.

Under the new proposal, in­vestors will be made to swap their existing cedi-denominated bonds into a package of 12 new local currency bonds, one maturing each year between 2027 and 2038.

The government would also pay accrued interest and a cash tender fee to holders of the local 2023 notes while creditors in the 2023 bonds would also receive a differ­ent exchange ratio allocation.

A minimum participation level of 80 per cent is the target.


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