Per the revised terms of the debt exchange program (DDEP), some financial market analysts have projected a default in Government of Ghana’s (GoG) ability to pay the Gh¢4.185 billion 5-year bond maturing today, February 6, 2023.

According to these analysts, government disclosed a possibility of default in its Second Amended and Restated Exchange Memorandum of the Domestic Debt Exchange Programme.

“Eligible holders holding eligible bonds maturing on or prior to the settlement date (including, without limitation, any extension of the settlement date (each such Eligible Bonds, a “Maturing Eligible Bond”) will not receive a final interest payment (except for Accrued Interest Payable for tendering holders as described below) and a final principal payment (regardless of whether an Eligible Holder has tendered or not) on such maturing eligible bonds.
“Offers or Exchange Instructions in respect of maturing eligible bonds made after their maturity date but prior to the settlement date will be, and those made prior to such maturity date will remain, valid. The Republic of Ghana will treat maturing eligible bonds in respect of such Offers or Exchange Instructions as still outstanding for purposes of the Invitation to Exchange.”
Amended and Restated Exchange Memorandum of the Domestic Debt Exchange Programme

However, these analysts averred that it is unclear whether the government will honour the interest payment of the debt instrument. Ideally, the government would have rolled-over the instrument, but market conditions make it unlikely to do so, they stated.

The memorandum noted that eligible holders holding eligible bonds including maturing eligible bonds in respect of which an interest payment date will occur prior to the settlement date will not receive payment of such accrued and unpaid interest on the usual interest payment date.

Meanwhile, the memorandum further pointed out that any accrued and unpaid interest on validly tendered eligible bonds including maturing eligible bonds as of the settlement date (and in the case of eligible maturing bonds, as of their maturity date) will be considered for purposes of calculating applicable Accrued Interest Payable.

These analysts as well predicted an expectation of a similar situation of a 2-year note to the tune of 3.406 billion maturing on February 20, 2023.

Amended And Revised DDEP Turns Out To Be More Complex

Commenting on the complicated nature of the amended DDEP, Bright Simons, the Vice President of Imani Africa, divulged that each new revision of the DDEP has made the terms more complex to be accepted for implementation by the stakeholders and associations of various institutions.

According to Imani’s Vice President, the government has made concession, but the haste to implement the program and refusal to co-build and agree on a particular structure to be adopted prevented broad consensus. Hence, the majority of the pensioners along with Individual Bondholders on the deadline of the DDEP will not sign onto the programme.

In his opinion, Mr. Simons stipulated that participation, upon the deadline, will be less than the government’s 70% forecasted members.

“48 hours to deadline of Ghana’s debt exchange program, where are we? The govt’s hardball tactics have the banks & insurance companies hooked. The latest offer will see part of new bonds’ interest deferred until after 2025. Old bond interest due before February 14 also deferred.
“Each new revision has made the terms more complex. Though the government has made concessions, the rush and refusal to co-create prevented broad consensus.”
Bright Simons