The government of Ghana led by the Minister of Finance, Ken Ofori-Atta has introduced a new Domestic Debt Exchange Programme (DDEP), aiming to exchange approximately US$809 million worth of its US dollar-denominated bonds.
The Initiative, known as the Invitation, invites eligible holders to participate in the exchange for a package of new bonds issued by the Republic.
The Invitation, described in an exchange memorandum available on the Invitation Website, calls upon holders of specified US dollar-denominated domestic notes and bonds, referred to as Eligible Bonds, to exchange them for the newly issued bonds, termed New Bonds.
The terms and conditions of the exchange are outlined in the memorandum.
This exchange follows a similar invitation launched on December 5, 2022, which successfully concluded on February 21, 2023, involving the exchange of Ghanaian cedi-denominated notes and bonds for new Republic bonds.
While the previous exchange represented a significant milestone towards the Government’s debt management objectives, the domestic debt exchange program remains ongoing.
The Government emphasised that the current invitation is distinct from the previous one and solely pertains to US dollar-denominated bonds governed by Ghanaian law.
The decision to launch this exchange program is rooted in the Government’s intention to restore stable public finances and achieve sustainable debt levels, aiming to stimulate economic growth in the aftermath of the COVID-19 pandemic and the global economic shock caused by the war in Ukraine.
Invitation to Exchange
The Invitation to Exchange offers eligible bondholders the opportunity to submit their US dollar-denominated bonds governed by Ghanaian law in exchange for new benchmark Government of Ghana bonds, also denominated in US dollars.
The new bonds will hold the same aggregate principal amount as the Eligible Bonds, including applicable capitalised accrued and unpaid interest.
Additionally, the New Bonds will feature a lower average coupon rate and an extended average maturity compared to the Eligible Bonds.
The successful completion of this domestic debt exchange programme holds significant importance for Ghana’s debt reduction efforts and ongoing program discussions with the International Monetary Fund (IMF).
It Is expected to facilitate international support and assist Ghana in achieving its debt targets.
The Government urges all holders of Eligible Bonds to participate fully in the exchange, emphasising its crucial role in the country’s economic recovery and fiscal stability.
Following Ghana’s unsustainable debt situation and part of IMF conditions for bailout, the government launched the DDEP, where it asked bondholders to participate in the DDEP; seeing it as a very critical act of burden-sharing in the ongoing national effort to tackle the economic crisis, bring back macroeconomic stability and guarantee sustainable growth and prosperity for the people of Ghana.
The DDEP is being done to help protect the economy and enhance our capacity to service our public debts effectively. The alternative of not executing the DDEP would have brought grave disorder in the servicing of Ghana’s national debt and exacerbated the current economic crisis.