Convener of the Individual Bondholders Forum, Senyo Hosi has challenged the Finance Ministry’s claim that the tradability of old bonds will be limited upon a successful Debt Exchange Programme.
Government extended the deadline for the Domestic Debt Exchange Programme to February 7, 2023, following its expiration yesterday.
This is the fourth time the deadline has been extended.
Government also revised the terms of the programme while reaffirming that all individual bondholders are free not to participate.
Government, however, indicated that upon a successful DDEP, there will be very few of the ‘old bonds’ in circulation, and likely limit its tradability.
It thus encouraged all Individual bondholders to participate in the Exchange.
But Mr. Hosi in an interview on the Citi Breakfast Show debunked the claims.
“One thing I want to debunk is this whole subtle suggestion that there will be challenges with tradability. I do not subscribe to it. Our technical committee doesn’t either. It is a matter of opinion. But to have leaders publicly say this is a total lie. There is no way you will lose your money if you join the new bond.
“The estimation of the Minister is that we will have less of the old bonds in the market, which means that the new bonds will be a lot more active. We are reducing 67 papers to 12, before that we had 67, with some as low as 79 and 800 million, So how can we say that people with 50 billion cannot trade among themselves with the pension fund?” he quizzed.
Revised DDEP terms:
a. An affirmation that all individual bondholders are free not to participate;
b. However, upon a successful DDEP there will be very few of the ‘old bonds’ in circulation, and likely limit its tradability;
c. In this regard, the Government is pleased to make available the following alternative offer to encourage all individual bondholders to participate in the Exchange:
i. All individual bondholders who are below the age of 59 years will be offered instruments with a maximum maturity of 5 years, instead of 15 years, and a 10% coupon rate;
ii. All retirees (including those retiring in 2023) will be offered instruments with a maximum maturity of 5 years, instead of 15 years, and a 15% coupon rate.
Additionally, discussions are being finalised with Organized Labour and Pension Fund Trustees, on a separate arrangement in accordance with the Memorandum of Understanding signed with Organized Labour on 22nd December 2022, and in line with government’s debt management Programme.
With this, Government encourages all stakeholders to participate in the DDEP, an essential step towards meeting our debt sustainability targets and restoring macroeconomic stability and economic growth.
These developments have necessitated the final extension of the deadline from 31st January, 2023, to Tuesday 7th February, 2023, and a new settlement date of Tuesday 14th February, 2023 that will be confirmed via the new Exchange Memorandum.
The Government appreciates the cordial engagements with the various stakeholders since the beginning of the DDEP, that have made such remarkable progress possible.
“All bondholders are hereby encouraged to commence all administrative processes towards their participation in the Exchange, in line with the agreements reached”, the statement concluded.