Convener of the Individual Bond Holders Association of Ghana (IBHAG), Martin Kpebu, has disclosed that the Finance Minister, Ken Ofori-Atta has assured that individual bondholders are exempted from the domestic debt exchange programme.

According to him, the Finance Minister, Ken Ofori-Atta has promised to pay Individual Bondholders their coupons and principals as they fall due.

In a press statement announcing the Minister’s assurance, he noted that the group is awaiting formal communique from the finance minister to affirm their exemption from the debt treatment.

“We have learned with great relief, the promise made by the finance minister to pay individual bondholders their coupons and principals as they fall due, thus effectively exempting us from the Domestic Debt Exchange Programme.
“This promise was made at a meeting of our representatives and finance minister on Friday, January 27, 2023, in his office. We look forward to a written communication of the promise for ease of reference among other reasons.”
Martin Kpen

Mr Kpebu expressed his gratitude to the finance minister and his technical team for their cooperation. Additionally, he noted that bondholders are equally happy that the government has reached an agreement with the banks, insurance companies and securities industry companies for their participation in the DDE.

“We urge our members to stay calm and urge them not to sign up to the new bonds.”
Martin Kpebu

Meanwhile, an economist, Dr Theo Acheampong, has revealed that government does not necessarily need the participation of individual bondholders to complete the Domestic Debt Exchange Programme.

According to him, the recent agreement based on a revised term between the government and some three institutions is enough to enable the completion of the programme. He noted that the consequence of including individual bondholders in the process would be dire.

“You have three of the important stakeholder groups now agreeing through their association to be a part of that process with revised terms that the government is offering to them. Specifically, we have the security agencies, the banks, insurance companies, and of course there’s the central bank and the likes in there.”
Dr Theo Acheampong

Government does not need bondholder for DDE to become a success

Elaborating on his stance, the economist indicated that other institutions have other incentives to cushion them should the restructuring exercise pose any problems afterwards. However, he explained that individual bondholders have no such alternatives, hence they could suffer dire repercussions even under the revised terms.

“Collectively, when you add all of them up, it is possible to actually get about 55% – 70% participation in the programme. What that then means is that you don’t necessarily actually need the individual bondholders for this to become a success in that regard.”
Dr Theo Acheampong

On his part, Senyo Hosi, a convener of the Ghana Individual Bondholders Forum, stated that the finance minister, Ken Ofori-Atta, has assured that individual bondholders who refuse to participate in the Domestic Debt Exchange programme will face no punitive actions.

He indicated that the Finance Minister’s assurance is a breath of relief following the earlier coercive stance of the Ministry at the onset of the debt programme.

“Well, it was first presented as voluntary by force, but right now I think that from my engagements with the Minister yesterday, it is voluntary-voluntary, and he’s committed to that. He was very emphatic that for individuals, there will be no punitive action if you do not accept the DDE.”

This comes after the government proposed that all bondholders will not receive any interest on their bonds for the 2023 financial year in its bid to rescue the economy and secure a deal with the International Monetary Fund (IMF).

The payment of dividends, according to the government is likely to begin next year, 2024 at a discounted rate of 5%.

However, individual bondholders vehemently fought the decision and also protested the lack of prior engagement between individual bondholders and the Finance Ministry concerning their inclusion into the programme.