Adnan Adams Mohammed
Ghana’s President, Nana Akufo-Addo, has touted recent agreement with Eurobond holders as a clear indication of renewed investor confidence in the country’s economy.
The government, fortnight ago, announced success in securing almost 100% participation in the Eurobond Debt Exchange Programme, which concluded on 30th September 2024.
The debt restructuring exercise, a key requirement under the International Monetary Fund (IMF) programme, was part of efforts to address Ghana’s growing debt burden and secure a US$3 billion bailout over three years.
“The restructuring will be completed by next week, with bondholders exchanging their old bonds for new ones under revised terms. The new terms would allow Ghana more flexibility in repaying its debt”, President Akufo-Addo indicated during an interview with France 24, last week.
He expressed optimism that the high level of participation, with 98.6% of bondholders agreeing to the deal, reflects growing confidence in Ghana’s economic recovery, particularly following the financial strain caused by the COVID-19 pandemic.
He added that the agreement involves different interest rates and will significantly ease the financial burden on the country. “Thirteen billion dollars of our debt has been restructured, with $5 billion written off. In total, we’re talking about savings of around $10 billion, which is a major boost for the economy,” Akufo-Addo noted.
He expressed optimism that improving macroeconomic indicators would soon lead to tangible economic development and better living standards for Ghanaians.
As part of the restructuring deal, a significant number of bondholders opted for what is known as the “disco menu,” which involves a 37% reduction in the face value of their bonds and interest payments of 5% from 2024 to July 2028, rising to 6% thereafter. These investors will receive three new bond instruments in return.
Others chose the “par menu,” which preserves the nominal value of their bonds but offers a lower interest rate of 1.5%, with the new bonds maturing in January 2037.
According to a statement from the bondholders, this Eurobond Debt Exchange Programme is a crucial part of Ghana’s broader debt restructuring efforts under the IMF deal.
The swap of old securities for new ones is expected to take place around 9 October 2024 with the entire settlement process finalised shortly afterwards.
