A coalition made up of bondholders have convened at the Ministry of Finance this morning, Monday, February 27, 2023, to meet the Finance Minister to find out why the coupon to be paid them on February 21, 2023 has been delayed.
The coalition constitutes 3 bondholder groups; Pensioners Bondholders Forum, Individual Bondholders Association of Ghana and Individual Bondholders Forum.
The Finance Minister, Ken Ofori-Atta, prior to this, assured the bondholder groups of paying their coupons which was after the settlement date, February 21, 2023. However, the payment has delayed resulting in the move of the conveners at the Finance Ministry.
“We haven’t had any information from the Ministry and therefore we have come to find out why the payment has not been made.”
Dr. Antwi
According to Dr. Adu Anane Antwi, there are two bonds that have matured with coupons that are due to have been paid, adding that:
“We want the payment to be effected and so if government says, well, I am going to effect payment today or tomorrow, the next day, we are fine. We just want to make sure that this is going to be paid.
“The assurance was given; 21st, I will pay and I think that if by 21st you can’t pay or you couldn’t do it on the 21st, it was only fair that that same 21st, you came out with a statement, explaining why you couldn’t make it on the 21st and assuring your investor that look, I am going to do this this way, wait for me, 1 or 2 days or 3 days, I’m resolving issues so that I come and pay you. But if there’s no information, then investors are worried that the time you promised to pay, you haven’t paid and you haven’t also told anybody why you weren’t able to pay.”
Dr. Antwi
This was in response to being asked about the demand they were going to place and outcome they expected from their visit to the Finance Minister.
Explaining the probable events that might have delayed the payment of these bondholders, Associate Professor of Finance at the Andrews University, Prof. Williams Peprah said:
“What has currently happened in terms of the payment of the bonds and principals which are due, in Finance we term as ‘settlement timing risk’, which is also part of default risk. So at the moment, we were all aware that government is struggling to raise funds. This may give as the indication that government does not have the funds available to pay, that is why the delay has happened. Or, because of the DDEP that has just ended, government has not finished the necessary accounting process to determine the individuals that have to be paid.
“Sometimes, the process would take some time in doing the sorting out very well, within the database itself is something that they have to be very sure about; that whoever gets being paid, is the rightful owner of the bonds and principal. Also because two bonds are due, the accounting process also becomes cumbersome so I’m sure that may be one of the reasons causing government to have this kind of delay.”
Prof. Peprah
Government’s delay in paying bondholders may erode investor’s confidence
The danger in the delay process, Prof. Peprah indicated is that, should government fail to communicate to bondholders on time, it is going to affect the 5-year plan of repayment that other investors, who walk into the DDEP will have given government.
“In short, government is going to suffer an element of trust because when there is a counterparty risk or default and the element of trust is eroded, then it will cause panic in the economy and confidence in government plans will be affected. It will make the government look very bad.
“Already, there has been a lot of mistrust from statements issued by the Finance Ministry, which they have not been able to honor. So government has to be very careful not to add more to it.”
Prof. Peprah
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