Ghana imposes 37% haircut on Eurobond holders in successful debt restructuring

Holders of Ghana’s Eurobond debt have agreed to a 37% haircut on their investments in the country’s debt instruments.

Ghana has reached an agreement with Eurobond investors to restructure approximately $13 billion of debt, according to statements from advisers to an international creditor committee and the government.

The key terms of the deal per the statements from advisers to an international creditor committee and the government involve bondholders accepting a nominal 37% haircut on their investments.

Investors will have the option to choose between two instruments: one offering an initial 5% interest rate and the other a 1.5% interest rate.

The 37% haircut in investments by the Eurobond holders is expected to result in some savings of $6bn for the country.

The agreement with Eurobond holders marks a significant milestone for the country.

Ghana unilaterally suspended payments on its external loans in December 2022 as part of a comprehensive debt overhaul aimed at meeting the conditions of a $3 billion International Monetary Fund (IMF) program.

The new agreement follows the IMF’s rejection of an earlier pact between the government and bondholders in April, which failed to satisfy debt sustainability requirements.

Ghana’s deal mirrors a similar arrangement recently secured by Zambia.

Earlier this month, Zambia reached a consensus with investors, enabling the country to issue two series of restructured notes after nearly four years of default.