You’re On Your Own If You Reject Debt Exchange Programme – John Kumah Warns Bondholders
Deputy Finance Minister Dr John Kumah has entreated bondholders to comply with the government’s debt exchange programme to avoid losing their funds.
Dr. Kumah stated that institutional bondholders who reject the programme would have themselves to blame because they may not benefit from provisions made by the government to cushion affected people.
“If you exclude yourself, then you don’t get the carrots, the benefits, the buffers that have been provided. Then you are on your own. It means that you are open to default in terms of if the market is unable to redeem,” he warned in an interview.
“Government will continue to engage the stakeholders, for them to be rest assured that we stand to gain better together than to fight over this matter,” he stated on Joy news.
According to the deputy minister, interested bondholders have a 10-day period starting from Monday, December 5, 2022, to sign on to the programme.
The government announced the debt exchange programme on December 5, 2022,
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 E.S.L.A. 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.
However, some of the institutions, such as the Trades Union Congress (TUC), the Ghana Medical Association, the Chamber of Corporate Trustees of Ghana, have rejected the offer.
Meanwhile, Deputy Ranking Member on the Finance Committee of Parliament, Isaac Adongo, says bondholders who will be affected by the domestic debt restructuring should sue the government to enforce their rights.