Ghana Eurobond holders forego $4.7b debt

Ghana’s Eurobond holders are expected to forego some $4.7 billion of the debt owed them by the country, and provide additional cash flow relief of approximately $4.4 billion to support debt sustainability efforts.

This is as a result of the agreement-in-principle reached between the government and the Eurobond holders on the treatment of the country’s $13 billion debt to external creditors.

“Under the Agreement in Principle, Bondholders would forego approximately $4.7 billion of their claims and provide cash flow relief of approximately $4.4 billion during the IMF program period,” the agreement term sheet stated.

While the members of the International Committee currently own or control some 40 per cent of the outstanding bonds, all other Regional Steering Committee members, jointly own or control about 15 per cent of the outstanding bonds.

The two concessions, totalling $9.1 billion are, therefore, to assist the country to achieve the debt relief required to restore debt sustainability under the $3 billion International Monetary Fund (IMF) loan-support programme.

Under the terms, bondholders accepted nominal losses of 37 per cent on their holdings, with two alternatives ‘DISCO’, and ‘PAR’ to choose from.

Bondholders who opt for DISCO would receive a five per cent interest rate on new bonds from January this year until July 2028 and six per cent, thereafter.

On the other hand, bondholders who go for the PAR option would get a 1.5 per cent interest rate on new bonds without any haircuts.

Meanwhile, the agreement-in-principle has required the government to ensure certain other creditors did not receive better net present value terms, and publish certain public debt information on a semi-annual basis.

Also, a loss reinstatement until 2032 upon certain events, an estoppel provision that precludes the government from raising legal challenges to the new bonds and liquidated damages are required.

This provision in the agreement-in-principle would be applicable in the event of a Supreme Court ruling of invalidity of the new bonds under the country’s law.

All these are happening ahead of the IMF Executive Board meeting on Friday, June 28, 2024, to consider Ghana’s second review programme, approval of which would lead to the disbursement of $360 million to the country. 

Source: GNA

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