Domestic Debt Exchange Programme: Govt to announce new deal today  …as deadline for voluntary individual bondholder participation ends tomorrow

The Ministry of Fi­nance (MoF), will today, announce a new package for individual bond­holders under the Domestic Bond Exchange (DDE) programme, a highly placed source familiar with the arrangement, has told The Ghanaian Times.

Although details of the new deal were not revealed, the source said, the offer would be in line with the government’s agenda to restruc­ture its debt to a sustainable level in order to seal the International Monetary Fund deal.

It described as inaccurate a state­ment by Martin Kpebu, a convener of the Individual BondHolders Forum (IBF) that the Ministry had agreed to exempt the individual bondholders from the DDE which deadline expires tomorrow.

According to the source, at the concluding meeting of the Joint Technical Committee, attended by representatives of the MoF and IBF, the ministry reiterated that the DDE invitation remained voluntary.

It said the ministry told the fo­rum that although the government would do its best to pay the cou­pons of those who do not accept the DDE invitation; it reminded the gathering that future payments would depend on government’s ability to pay.

The source also asked the bondholders to consider the risk associated with the old bonds and their tradability and accept the new package so that the government could round up the DDEP.

The government, on January 16, extended the deadline for the Debt Exchange Programme to tomorrow, January 31, to enable it to 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 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.

Last week the Minister signed deals with the Bankers Associa­tion of Ghana, Ghana Insurers Association (GIA), the Ghana Securities Industry Association on new offers under the DDE.

Instead of the exemption re­quested by the groups, they would now receive payment of five per cent coupon for 2023 and a single coupon rate for each of the 12 new bonds, resulting in an effec­tive coupon rate of nine per cent.

The IMF in December last year reached a staff-level agreement with Ghana 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.

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