Govt unveils $13 billion bond restructuring offer

The government has announced a major restructuring offer for $13 billion of its international bonds.

This move follows a preliminary agreement reached over two months ago with two key bondholder groups.

The offer, detailed in a regulatory statement on the London Stock Exchange, proposes that bondholders swap their existing bonds for new instruments. Holders have until September 30 to accept, with a 1% consent fee available for those who agree by September 20.

This restructuring is a pivotal moment in Ghana’s ongoing debt relief efforts, which began after the country defaulted on a substantial portion of its $30 billion international debt in 2022.

The default was driven by the COVID-19 pandemic, the Ukraine war, and rising global interest rates. Ghana’s approach aligns with the G20 Common Framework, a strategy also employed by Zambia and Chad, despite criticism over its complexity and slow pace.

The bond offer includes two options for investors: a “disco” bond with an interest rate starting at 5% and rising to 6% after mid-2028, or a par bond capped at $1.6 billion with a 1.5% coupon and a 2037 maturity.

This restructuring will result in bondholders relinquishing approximately $4.7 billion of their loans, while offering cash flow relief of around $4.4 billion until the end of Ghana’s current IMF program in 2026.

Economist and finance professor Godfred Bokpin from the University of Ghana hailed the announcement as a crucial milestone. “With this, investors now have a fair understanding of their losses and they can move on,” Bokpin told Reuters.

The new bonds are scheduled for issuance on October 9, with holders of the partially World Bank-guaranteed Ghana 2030 international bond receiving their guarantees on the same day or shortly thereafter.