As a means to fulfill assurance given by government to bondholders who did not tender their old bonds, the Finance Ministry of Ghana has announced that payments for coupons and principals under the Domestic Debt Exchange Programme (DDEP) will resume on March 13, 2023. This applies solely to old bondholders who did not sign up for the DDEP.
The move comes after three bondholder groups, the Pensioner Bondholders Forum, Individual Bondholders Association of Ghana, and Individual Bondholders Forum, converged at the Ministry of Finance on Monday, February 27, to demand an immediate payment for coupons and principals that matured on February 6th and February 20th, 2023.
The Coalition of Individual Bondholders Groups marched to the Finance Ministry to check on the payment of coupons and principals for bondholders whose bonds had matured but whose payment had not been honoured despite government’s promise.
In a statement released as a response to the three bondholder groups, the Finance Ministry communicated that the newly issued bonds have been settled and listed, hence, will become the new benchmark bonds for the fixed-income market.
“The Ministry of Finance will work with relevant stakeholders, as agreed, to ensure that these new benchmark securities become the basis for deepening the domestic sovereign debt market.”
Statement by Ministry of Finance
The move to resume payments for coupons and principals for old bonds will likely be seen as a positive development by bondholders who have been eagerly waiting for payments. The delay in payments has caused concern among individual bondholders, who have been pressuring the government to honour its commitment.
The Ghanaian government’s commitment to meeting its financial obligations is important, not only for individual bondholders but for the wider financial system. Failure to honour commitments could lead to a loss of investor confidence, which could have severe consequences for the country’s financial stability.
S&P Rating Acknowledges Successful Delivery Of New Bonds
S&P Global Ratings raised Ghana’s local currency sovereign credit ratings from Selective Default (SD) to ‘CCC+/C’.
The Finance Ministry in its statement stated that the ratings by S&P Global acknowledges the successful completion of the Domestic Debt Exchange Programme with a successful delivery of new securities to bondholders, adding that: “In doing so, the selective default is substantially cured.”
Ministry of Finance continued that the above stated milestone is further expected to accelerate the engagement with the country’s creditors.
“The government also takes this opportunity to assure our external creditors of equal importance to the Republic of Ghana. We will therefore continue to work together to advance the progress of our external debt treatment, in order to ensure Ghana’s long term macroeconomic stability.”
Statement by Ministry of Finance
