With less than 12 hours to the supposed final deadline of the Domestic Debt Exchange (DDE), the Individual Bondholders Forum has reiterated its firm position of not signing onto the program, disclosing analysis and evaluations made on the various individual bondholder’s portfolio and assuring its member bondholders of their secured bonds.

On February 05 2023, the Government of Ghana issued its Ghana 2nd Amended and Restated Exchange Memorandum to holders of what it termed as Eligible Bonds.

A statement released by the technical committee of the Individual Bondholders Forum (IBF) on the 09 February 2023 indicated that the committee reviewed the Ghana 2nd Amended and Restated Exchange Memorandum and its implication for individual bondholders and collective schemes.

According to the communique, the review was briefed to Members of Individual Bondholders Forum (IBF), the Individual Bond Holders Association of Ghana (IBHAG) and the general public via an online town hall meeting on February 06, 2023.

The briefing, according to the committee, was for general informational and educational purposes only and does not replace the individual bondholder’s responsibility to seek independent professional advice.

“The IBF and its technical committee shall not be responsible for how users may apply the information herein.”
The Individual Bondholders Forum (IBF)

Speaking on the individual portfolios, IBF disclosed that since the analysis was made on the entire eligible bonds portfolio based on a Weighted Average Coupon Rate of 19.225%, the impact may vary for each unique individual portfolio.

That notwithstanding, IBF further indicated that the evaluation estimated the loss of value for Category: A as 33%, B as 18.7% and C as – 45.4%.

“The estimated losses are compounded by the lower legal protections afforded to holders of the new bonds, who are key among the blanket immunity, from execution and attachment of Diplomatic or Military assets. That is, assets located in Ghana and dedicated to public and government use which Government gains in addition to assets under PRMA ACT815.
“The implications of this proposal are dangerous for our economy which will see a dramatic loss of loanable funds and catastrophic social dislocation from the inequitable apportionment of the burden to reduce the size of Government debts to IBFs.”
The Individual Bondholders Forum (IBF)

Government Urged To Focus On Fiscal Readjustment

Furthermore, the committee communicated that the IBF analysis demonstrates that the inclusion of individuals or Collective Investment schemes in the DDE is unnecessary, especially if the fiscal readjustment recommendations advised by the IBF and others are prioritized in government’s pursuit of debt sustainability.

“The involvement of individuals and CIS in the debt exchange program as structured is inimical to the economic fortunes of Ghana. The old bonds are superior in legal and economic structure than the new bonds as proposed. The new bonds stand the risk of political abuse with no viable remedy for individual.”
Individual Bondholders’ Forum

Making a case for their submissions, the IBFs indicated in their statement that because Pension Funds (PFs) are exempted from the DDEP and Individual bondholders (IBs) who do not opt-in to the DDEP will be holding similar bonds, Government of Ghana cannot legally discriminate against the servicing of same bonds held by different investors. “ All are required to be treated equally on pari passu basis,” it stated.

In effect, the IBF stipulated that the exemption of PFs currently presents an increase in the insulation for IBs from selective abuse by government.

IBFs Advice To Individual Bondholders

The IBF with optimism has therefore urged its members and the 1 million other persons who hold individual bonds or are members of collective investment schemes to self-exempt, refrain from trading bonds ahead of the clear market period of 6-months and reinvest early bond maturities in old bonds at a discount or in short dated papers like treasury bills.

Consequently, the IBF recommended to its members that individuals and collective investment schemes (especially Money market funds) and the 1 million other IBs, including persons who have invested in collective investment schemes hold on to their current bonds.

“Overall, the recommendation to IBs as to whether to keep their current bonds or opt-in for new DDE-3 bonds focused on the fact that with current Bonds the investment; retains the average original coupon rates of 19.225%, assures secured revenue from assigned taxes in the case of ESLA & Daakye though GoG Bonds are unsecured.
“With the new DDE-3 bonds; GoG grabs for itself blanket immunity and investors have no enforceable legal recourse for a Breach by GoG, Investors will lose 33%-19% of investment at the average original coupon rates, the GoG debt is not 100% unsecured, GoG can refuse to pay and restructure the bonds ad infinitum with no legal consequence and there is a higher risk of default.”
Individual Bonholders Forum