The Individual Bondholders’ Forum (IBF), a representative body fighting for the best interest of individual investors, has petitioned the government to exclude individual bondholders from the domestic debt exchange program (DDEP).
According to IBF, government should take into consideration the option of excluding natural persons with investment securities in bonds.
“The inclusion of Individual Bondholders in the proposed domestic debt exchange (“DDE”) programme announced on the 24th of December 2022 has been extremely unsettling and catastrophic for our membership and all others affected.
“We hereby humbly petition your office to reconsider your position in the DDE information memoranda of 24th December 2022 and as a matter of urgency grant the; exclusion of Individual Bondholders from the DDE, exclusion of individual investors’ holdings in Collective Investment Schemes affected by the DDE, exclusion of individual investors’ holdings in the ESLA Bonds and the exclusion of individual investors’ holdings in the Daakye Bonds.”
The Individual Bondholders’ Forum
The Case of IBF
According to IBF, since the commencement of considerations and discussions on government’s debt restructuring in the second half of 2022, Individual Bondholders have not been engaged in the process by the Ministry of Finance. “This is at variance with the contractual principles of good faith, fairness and best practices,” they stated.
Bemoaning the social impact of the debt exchange program, IBF disclosed that the initiative currently presented for individuals is the harshest on any investor category and catastrophic to the livelihoods of the about 1.3mn direct and indirect bondholders as well as their dependents.
“Unlike other investor categories likely to benefit from the Financial Stability Fund, Individual Bondholders have no support to fall back on,” they added.
“We trusted the Bank of Ghana’s zero risk rating on government bonds. We chose to invest our strained earnings in Government bonds on the back of this trust to provide security of income required to meet pertinent needs like medication, children’s education and the general welfare of our families.
“The decision to include Individual Bondholders in the DDE evokes painful memories of loss many of our members suffered in the infamous banking sector clean up. It will be a sad case of double jeopardy for Government to superintend a process where ordinary Ghanaians will have to suffer yet again after the recent banking crisis.”
The Individual Bondholders’ Forum
IBF further revealed that most of its individual bondholder members included pensioners whose sustenance, health, dignity of independence and honour of responsibility in taking care of their young wards and families depended on their returns and cashflow from these government securities.
In questioning the government, IBF stated that the structure of the DDE is at variance with the programmed needs of individuals, and therefore, resulting in pains and punishment. “How do you expect them to self-sustain?” they asked.
IBF Reminds Government of its Promise
IBF drawing back the government’s attention to its previous statements, stipulated that the government assured the public of no haircut, but to their dismay, they tend to see the opposite of what was communicated.
“His Excellency the President was explicit that there will be no haircuts. In your public address on the 5th of December 2022, you quoted 1 Samuel 30:19 saying ‘nothing was missing, small or great. I say to you, nothing will be lost, nothing will be missing, and nothing will be broken. We will, together, recover all.’ This was the case for us before your information memorandum on the 24th of December 2022.
“But today, our coupons face absolute haircuts and when we discount your proposed benchmark bonds at the coupon rates of the original bonds, we are losing effectively 50% of our investments. When discounted at current T-bill rates, we are losing 71% of our investments, and at prevailing inflation, we face an 88.2% loss. Respectfully, you and H.E. the President’s promise of no loss or haircut has not in any form been honored. We do not wish to believe that you intended to say, ‘Great will be lost, too much is missing, everything is broken, you will not recover, your livelihoods shall be destroyed’.”
The Individual Bondholders’ Forum
According to them, the direct individual bondholding and holdings through collective investment schemes stand at about GHS15.5bn, representing about 11% of the eligible bonds and the capitalized interest. With the set target of 80% of eligible bonds, IBF beseeched the government to eliminate individual bondholders as they are not a critical success factor to the viability of the DDE program.
IBF in its conclusion advised the government to reconsider its decision of including individual bondholders in the domestic debt exchange program.
“Sir, let it not be said ever that during your tenure, your policies impoverished citizens whose primary duty to country was service and love through hard work and taxes. Your DDE as proposed for Individual Bondholders takes away our liberty to self-sustain, mocks hard work, and robs us of legally acquired property. None of these reflect the tenets of good governance.”
The Individual Bondholders’ Forum
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