Government to launch $13bn Eurobond Debt Exchange Programme
Government is set to launch the highly anticipated Eurobond Debt Exchange Programme next week, according to sources familiar with the plan.
The Finance Ministry is aiming to restructure approximately $13 billion of Eurobond holders’ debts. The Eurobond Debt Exchange Programme is expected to run for 10 days.
Under this programme, the Ministry of Finance will invite investors to exchange their existing bonds for new ones as part of the restructured debt.
This follows an agreement in principle reached with Eurobond holders in June 2024, with the prospectus now ready for launch.
Key Terms of the Eurobond Offer:
As per the June 2024 agreement, Eurobond holders are expected to forgo about $4.7 billion owed by the Government of Ghana. This is part of the effort to restructure a $13.1 billion debt.
The term sheet for the Eurobond deal indicates that bondholders will also provide a cash flow of $4.4 billion during the period under the International Monetary Fund (IMF) programme.
The government is proposing two options for the bondholders: the P.A.R. and Disco Options. Investors opting for the Disco option will receive three new bond instruments, while the P.A.R option will have a cap of up to 1.6 billion cedis.
Additionally, bondholders have agreed to a 37% haircut on their interest and maturity, which will be reflected in the offer.
The government will also include a Non-Financial Term, described as a “most favoured creditor clause,” to ensure that other creditors do not receive better net present value terms.
IMF/World Bank Endorsement:
The International Monetary Fund (IMF) has approved the deal, noting that the terms align with Ghana’s Debt Sustainability Programme. In its staff report on Ghana, the IMF recommended that the country finalize the External Debt Restructuring before the December elections.
Ghana is also working on reaching an agreement with bilateral commercial creditors as part of its plan to restructure its total external debts.
World Bank Country Director Robert Taliercio O’Brien, in an interview expressed optimism that a timely agreement with external creditors will aid in the economic recovery.