The Ghana Securities Industry Association (GSIA) has rejected the Debt Exchange Programme proposed by the government.
GSIA, in a statement, argued that a bond is an agreement between two parties; hence, any changes to the terms must be agreed to by all parties involved.
“We are unable to accept the bond exchange programme announced by the Minister of Finance in its present form. We believe a bond is a contractual agreement between a borrower and a lender (bondholders), and therefore any changes to the terms must be agreed to by both parties,” the Association said.
According to the GSIA, it understands the difficult crossroads at which the nation currently finds itself and the difficult choices that need to be made to set the country on the path to debt sustainability, but it will not compromise on its position.
On the way forward, GSIA said it hopes to engage the Ministry of Finance on its concerns and reservations.
“We, therefore, urge the investing public to continue to have confidence in us as we pursue this process. In this vein, we entreat clients of our member firms to allow us to engage and then communicate the outcomes to enable them to take the best decision on their investments.
The Association, which is made up of security exchange firms and investment and capital market operators, argued that the programme is unacceptable.
They also expressed surprise that an earlier industry consultative input was not factored in when the Debt Exchange Programme was launched on December 5, 2022, by the Finance Minister, Ken Ofori-Atta.
According to Finance Minister Ken Ofori-Atta, the objective is “to invite holders of domestic debt to voluntarily exchange approximately ¢137 billion of the domestic notes and bonds of the Republic, including ESLA and Daakye bonds, for a package of New Bonds to be issued by the Republic.”
Bondholders like pension funds, banks and insurance firms will have to exchange their bonds for one that will earn zero interest next year.
The new bonds will only begin to earn five per cent interest in 2024 and 10 per cent for the remainder of their tenure. The maturity dates have also been extended, with the first bonds only maturing in 2027.