Bondholders have until September 30 to accept the offer, while those who agree before the early deadline of September 20 will be eligible for a 1% consent fee, according to the government’s “exchange offer and consent solicitation” published in a regulatory filing on the London Stock Exchange.
Ghana, a leading producer of gold and cocoa, defaulted on most of its $30 billion international debt in 2022, as the economic fallout from the COVID pandemic, the war in Ukraine, and rising global interest rates pushed it into crisis.
The country is restructuring its debt through the G20 Common Framework, a process that Zambia and Chad have also undergone, while Ethiopia is expected to follow, though the framework has been criticised for its sluggishness.
Ghana’s international bondholders committee expressed support for the restructuring proposal, emphasising the importance of maintaining economic reforms to restore access to global financial markets.
A regional group representing over 25% of the bonds also backed the offer, stating they will “continue to invest and contribute towards creating a more dynamic economy”.
Bondholders will be given the option to exchange their current holdings for a “disco” bond, which offers a 5% interest rate, increasing to 6% after mid-2028, with maturities spread across three instruments maturing between 2026 and 2029. This option includes a 37% reduction in principal.
Alternatively, bondholders can opt for a par bond, capped at $1.6 billion, consisting of three instruments, the primary of which will offer a 1.5% coupon and mature in 2037, with no reduction in principal but a writedown of overdue interest. The offer will remain open for 21 days.
Ghana’s agreement will result in bondholders giving up around $4.7 billion of their loans, while offering cash flow relief of approximately $4.4 billion through 2026, when the country’s current IMF program concludes.
Godfred Bokpin, an economist and finance professor at the University of Ghana, called the announcement a significant step in the nation’s restructuring efforts, stating, “With this, investors now have a fair understanding of their losses and they can move on.”
According to a government statement, the new bonds will be issued on October 9.
Holders of Ghana’s 2030 international bond, partially guaranteed by the World Bank and included in the restructuring, will receive their guarantee payments on the same day or shortly thereafter.