Ghana is launching a Eurobond debt restructuring offer to swap $13 billion of its international bonds for new instruments, to address economic challenges.
The Exchange Offer and Consent Solicitation, announced by the Ministry of Finance on September 5, 2024, is a vital part of the government’s strategy to reduce its unsustainable debt load.
The offer, open until September 30, will be issued on October 9. It provides bondholders with two options: a Par bond with a lower interest rate and longer maturity or a Disco bond with a higher interest rate and shorter maturity.
Those who agree to accept the offer before an early deadline on Sept. 20 will be eligible for a 1% consent fee.
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Under the terms of the agreement, bondholders will forfeit around $4.7 billion of their loans, resulting in approximately $4.4 billion in cash flow relief until 2026, when the country’s current International Monetary Fund programme ends.
The government has also engaged private banks and contractors, owed $2.8 billion, in restructuring talks.
The Finance Minister, Dr. Mohammed Amin Adam, has urged bondholders to participate in the exchange offer, stating that it will allow Ghana to save $4.4 billion in debt service and contribute to reducing its debt-to-GDP ratio.
Ghana’s economic struggles have been exacerbated by global challenges, including the COVID-19 pandemic and the Russia-Ukraine war, leading to soaring inflation and a depreciating currency.
The country declared a sovereign default on most of its $30 billion of international debt in December 2022 and has since sought support from the IMF under a $3 billion Extended Credit Facility,
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A committee of Ghana’s international bondholders supports the restructuring offer, stating economic reforms must regain access to international financial markets.
The offer was also welcomed by a regional group that held over 25% of the bonds. They pledged to “continue to invest and contribute towards creating a more dynamic economy”.
