Ghana received “overwhelming” participation and support from its international bondholders to restructure $13 billion of eurobonds, a key step marking the conclusion of the West African nation’s debt rework.
Over 90% of bondholders agreed to a debt exchange following a consent solicitation, paving the way for the government to issue new bonds to investors to replace existing ones, the government said in a statement Thursday.
Investors will swap their securities for new notes on or around Oct. 9, with the complete settlement process expected to be finalized shortly thereafter, according to the statement. Ghana Bondholders Overwhelmingly Support Debt Restructuring – Bloomberg
The results mark a resolution after Ghana unilaterally halted payments onvmost of its external debt in 2022 and kicked off a revamp process. The country also agreed to a $3 billion bailout program with the International Monetary Fund in May of 2023 to help set its debt obligations onto a sustainable path as interest payments consumed more than half of government revenues.
“This landmark achievement ushers in a new phase of economic recovery, returning Ghana to a sustainable debt path and putting us back on the investor map,” the Ministry of Finance said in a separate statement.
The country’s dollar-denominated sovereign bonds were among the bestvperformers in emerging markets on Thursday. Securities maturing in 2032 rose 0.2 cent to 53.46 cents on the dollar at 1:30p.m. in London.
Notes due 2042 gained 0.1 cent to 53.33 cents on the dollar.
Ghana reached an agreement in principle with investors to reorganize its eurobonds in June, presenting them with the choice between two alternatives: a so-called DISCO option or a PAR option.
Investors who accept the former option will take a 37% hair cut and receive two new bonds maturing in July 2029 and 2035, respectively, carrying interest rates of 5% from this year through July 2028 and stepped up to 6% thereafter. Bondholders who opt for the latter will get a 1.5% interest rate on new bonds maturing in January 2037 without any haircuts.
The West African nation’s deal has been hailed as one of the quickest under the Group of 20’s Common Framework, which works with the principle of comparability of treatment between sovereign lenders and bond investors. It took Zambia nearly four years to issue two series of restructured notes to investors.
— With assistance from Selcuk Gokoluk
