Ghana: Dollar-Dominated Domestic Debt Restructuring – Govt to Exchange $809 Million …to Bring Ghana On Path of Debt Sustainability

As part of efforts to bring the country on the path of debt sustainability, the government has announced a new Domestic Debt Exchange Programme (DDEP) for dollar-denominated bonds involving the exchange of about US$ 809 million of the denominated notes and bonds.

The existing bonds should have matured between November 2023 and 2026 but are being replaced with new ones which would mature in the years 2027 and 2028, to give the government some financial reprieve.

A statement issued by the Ministry of Finance in Accra on Friday and copied to the Ghanaian Times said “The Government of the Republic of Ghana (the “Government” or “we”) announced today that it is inviting (the “Invitation”) Eligible Holders (as defined below) to exchange approximately US$809 million of its U.S.-denominated domestic notes and bonds specified in Table A (the “Eligible Bonds”) for a package of new bonds (as further described below, the “New Bonds”) to be issued by the Republic.”

The Finance Ministry explained that though the government had successfully exchanged about GH₵82 billion of the Cedi-denominated notes and bonds of the Republic through E.S.L.A Plc and Daakye Trust Plc for new bonds in February 2023 as part of efforts to reduce Ghana’s public debt and bring the country on the path of sustainability, the domestic exchange programme was not yet complete.

“Today, we are launching a similar invitation to exchange, this time in respect of the dollar-denominated bonds issued domestically by the Republic of Ghana and governed by Ghanaian law. For the avoidance of any doubt, this Invitation is separate from the invitation to exchange launched in December 2022 and concluded in February 2023, and does not involve any GHS-denominated securities,” it said.

The statement said “This Invitation to Exchange is an arrangement through which holders of Eligible Bonds will submit their holdings of Eligible Bonds governed by Ghanaian law and denominated in U.S.$ dollars (U.S.$) for new benchmark Government of Ghana bonds denominated in U.S.$, with the same aggregate principal amount (plus applicable capitalised accrued and unpaid interest), and which have in the aggregate a lower average coupon and extended average maturity than the Eligible Bonds.”

The statement said the exchange of the dollar-denominated domestic bonds for new ones had become necessary to “restore sound public finance and sustainable debt levels and kick-start economic growth following the impact of the COVID-19 pandemic and the global economic shock created by the war in Ukraine.”