Government invites individual bond holders to exchange them for new ‘safe ones’

The Government has invited eligible individual bond holders to exchange their old bond holdings for new ones with extended maturity in a domestic debt exchange programme.

The invitation to exchange is expected to expire on January 16, 2023 at 1600 hours.

The Government said the exchange programme would allow the country to restore sound public finance and sustainable debt levels and to kick-start economic growth following the impact of the COVID-19 pandemic.

It said the alternative to the debt exchange would be a far worse economic crisis with protracted closure from international markets, including imported goods and services, and further domestic both for the real economy and the financial sector, it would also mean depleted fiscal resources to support the neediest.

“We are acutely aware of the upfront cost of this transaction, and other aspects of our adjustment programme, to participating holders. To that end we are carving out from this exchange treasury bills (up to one-year maturity) typically held by retail investors”, he continued.

It explained that there was also a positive trade-off for debtholders as a group, with this transaction, though resulting in reduced coupon payments from 2023, which would make a positive contribution to a safer and brighter future for all Ghanaians.

Individual bond holders were initially exempted from the Domestic Debt Exchange Programme that the Government launched on Monday, December 5, 2022.

However, Finance Minister Ken Ofori Atta, in announcing the exemption of pension funds from the debt Exchange Programme in response to recommendations by major stakeholders, on December 22, said it would come at a cost.

The invitation is to exchange certain domestic notes and bonds of the Republic of Ghana, E.S.L.A. Plc, and Daakye Trust Plc (collectively, the “Eligible Bonds”) for new bonds of the Republic of Ghana.

The Government has reached staff level agreement with its negotiation with the International Monetary Fund for a three-billion dollar bailout.

It says the amendment in the debt exchange programme is necessary to reach a Management and Board levels agreement with the IMF.

Find attached the Amended and Restated Memorandum of Exchange: