Ghana’s Domestic Debt Exchange Program Reopened: An Opportunity for Bondholders

Ghana’s Domestic Debt Exchange Program Reopened: An Opportunity for Bondholders

The government of Ghana has reopened its Domestic Debt Exchange Program, providing another opportunity for holders of bonds from E.S.L.A. Plc and Daakye Trust Plc to trade their holdings for a new package. This fresh invitation is a continuation of the exchange program that closed in February 2023, aimed at those bondholders who were unable to participate due to various delays.

This reopening has been initiated in response to a number of bondholders who were unable to participate in the February 2023 exchange due to various delays. The Ministry of Finance is encouraging holders of these domestic notes and bonds, known as Eligible Bonds, to voluntarily accept this invitation. However, it’s important to note that the invitation is not accessible to all. It is only available to registered holders of Eligible Bonds who are not Pension Funds.

Exclusion of Previous Participants

If bondholders have already tendered Eligible Bonds in either of the two previous GHS-denominated invitations to exchange by the government in 2023 (i.e., the February 2023 Exchange or in August 2023 related to Pension Funds), they are not eligible to participate in this current invitation. This arrangement is designed to provide an opportunity for those who missed out on the first round.

The Domestic Debt Exchange Program was initially launched in December 2022, with an aim to restore Ghana’s capacity to service its debt. With this recent reopening of the program, the government continues to strive towards that goal. The Ministry of Finance has released a detailed statement that provides further information about the reopening of the program. The statement also indicated that the government will issue the new tranches on September 29, which is the reopening settlement date, to Eligible Holders whose offers are accepted for credit to the account of such Eligible Holder at the Central Securities Depository.

Expected Outcomes and Benefits

According to the Ministry of Finance, the new bonds, including the New Tranches, are expected to be more liquid than the Eligible Bonds considering the larger investment base and the benchmark size of the new bonds. The government could, under certain circumstances, prioritize payments on the New Bonds over payment on the Eligible Bonds. The invitation is expected to improve the cash flow position of the government and further support debt sustainability. The exercise, which ends on September 22, 2023, is designed to allow eligible bondholders to participate with the possibility of the government prioritizing payments on the new bonds over eligible bonds.