Professor Williams Peprah, Professor of Finance at Andrews University, has advised the Finance Minister, Hon Ken Ofori-Atta, to seek out Vulture investors to enlarge whatever money the government will receive from the International Monetary Fund (IMF) after the end of their negotiation.
Vulture investors are persons or organizations that buy shares cheaply in companies that are failing in order to take control, improve their performance, and so make money: Bonds of troubled companies can offer profits to vulture investors. They purchase troubled companies whose prices have been severely depressed in the market. Thereafter, an aggressive action is taken to revive the company and boost profits, usually via large or heavy cost-cutting exercises like job layoffs.
Prof’s suggestion is in reaction to Moody’s downgrading of Ghana’s long-term issuer ratings to Ca from Caa2 or further junk status and changed the outlook to stable.
According to him , Ghana’s recent downgrading by Moody’s to Ca from Caa2 or further junk status, whiles a devastating blow to the country’s prospects, also poses an opportunity to attract these vulture investors to invest in the economy.
The Proffesor indicated that, with the country now at a junk status, Ghana’s highly distressed bonds will be desirable to these high risk investors who will be anticipating the high yields in the long-term when the economy rebounds.
Speaking in an interview, Prof Peprah said, “Let me give you some positive signals of the ratings. We have been talking that it’s going to affect Ghana but there are some positive signals. There are some investors, we call them vulture investors, they are interested in distressed bonds.”
“If I were Ofori Atta, by now I will be coming to the United States to look out for vulture investors. They will be prepared to give money to the government and wait for a long period. When they do that, the returns is abnormal. They are not afraid of risk.
“That is probably what I was expecting the Finance Minister to do, be traveling around and be talking to people. He did that in the first year when he came into office. The Templeton fund that came in, Templeton is a vulture investor. So he may have to go and look for vultures who can give us money for a longer period alongside what IMF is giving to us.”
Prof William
Ghana’s Rating Downgraded By Moody’s, warned investors could lose in debt restructuring
Ghana was downgraded deeper into junk territory by Moody’s Investors Service on the likelihood that private creditors will incur steep losses during the government’s planned debt restructuring.
The downgrade follows plans in Ghana’s proposed 2023 government budget to restructure both local and foreign debts.
The country’s credit rating was slashed by two levels to Ca, the second-lowest score at Moody’s, according to a statement by Moody’s. That puts Ghana on par with Sri Lanka, which is in default.
“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022. Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability,” analysts Lucie Villa and Marie Diron wrote in the statement.
At the same time, Ghana’s outlook was changed to stable as the restructuring will likely happen in coordination with creditors and under a program with the International Monetary Fund, according to Moody’s.
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