The Ghanaian government has unveiled an offer to restructure $13 billion of its international bonds.
This move follows a preliminary agreement reached with two bondholder groups over two months ago.
Published in a regulatory statement on the London Stock Exchange, the offer invites bondholders to exchange their existing holdings for new instruments.
Bondholders have until September 30 to accept, with those agreeing before September 20 eligible for a 1% consent fee.
The restructuring comes as a crucial development in Ghana’s efforts to resolve its debt issues, which stem from a default on most of its $30 billion international debt in 2022.
This default was influenced by factors such as the COVID-19 pandemic, the war in Ukraine, and rising global interest rates.
Ghana’s debt restructuring is being conducted under the G20 Common Framework, a method also employed by Zambia and Chad, which has faced criticism for its slow process.
However, the current progress is viewed as a positive advancement.
The restructuring offer includes two bond options: a “disco” bond with an interest rate starting at 5% and increasing to 6% after mid-2028, and a par bond capped at $1.6 billion with a 1.5% coupon and a 2037 maturity date.
This agreement will see bondholders relinquish about $4.7 billion of their loans and grant Ghana approximately $4.4 billion in cash flow relief until 2026, aligning with the end of the country’s current International Monetary Fund program.
Economist and finance professor Godfred Bokpin hailed the announcement as a significant milestone.
“With this, investors now have a fair understanding of their losses and they can move on,” Bokpin told Reuters.
The new bonds are set to be issued on October 9, with holders of the Ghana 2030 international bond, partially guaranteed by the World Bank, receiving their guarantee payment on the same day or shortly thereafter.