Gov’t seeks to Woo individual bondholders; Offers new terms, extends deadline again to Feb 7
1st February 2023
Government has extended the Domestic Debt Exchange Programme (DDEP) for a final time to make way for all stakeholders to participate in the programme, based on the ‘last leg’ amendments.
The Ministry of Finance, in a statement, mentioned these amendments have necessitated a final extension of the deadline from January 31, 2023, to Tuesday, February 7, 2023; and a new settlement date of Tuesday, February 14, 2023, that will be confirmed via the new Exchange Memorandum.
The ministry noted that government has made significant progress with all stakeholders, including financial sector industry associations and representative groups of individual bondholders, with respect to their participation in the Domestic Debt Exchange Programme (DDEP).
The DDEP has been touted as an essential step toward meeting the country’s debt sustainability targets and restoring macroeconomic stability and economic growth.
The ministry indicated that based on the engagements with the representative groups of individual bondholders, a series of offers have been made which will form part of the new Exchange Memorandum.
It stated that all individual bondholders are free to not participate; however, it cautioned that upon a successful DDEP there will be very few of the ‘old bonds’ in circulation, and likely limit their tradability.
In this regard, government is offering instruments with a maximum maturity of 5 years instead of 15 years, and a 10 percent coupon rate to all individual bondholders who are below the age of 59 years.
Further to this, all retirees – including those retiring in 2023 – will be offered instruments with a maximum maturity of 5 years instead of 15 years, and a 15 percent coupon rate.
These alternative offers are meant to encourage all individual bondholders to participate in the Exchange. “Based on the agreement reached with the Ghana Association of Banks (GAB), Ghana Insurers Association (GIA) and the Ghana Securities Industry Association (GSIA), the new terms of the exchange have been accepted. A revised and final Exchange Memorandum will be released by Thursday, February 2, 2023,” a portion of the statement read.
“Additionally, discussions are being finalised with Organised Labour and Pension Fund Trustees, on a separate arrangement in accordance with the Memorandum of Understanding signed with Organised Labour on December 22, 2022, and in line with government’s debt management programme,” it said.
Government has encouraged all stakeholders to participate in the DDEP, an essential step toward meeting our debt sustainability targets and restoring macroeconomic stability and economic growth. Meanwhile, individual bondholders – particularly under the canopy of the Individual Bondholders Forum (IBF) – have on different occasions stated that they expect to exempted entirely from the programme.