The Convener of the Individual Bondholders Forum (IBF), Senyo Hosi, says the government’s revised terms on the Domestic Debt Exchange Programme are much better.
Mr. Hosi explained that the revised terms of the programme are an improvement from what was originally tabled by the government.
The government further extended the deadline for the programme to February 7, 2023, following the expiration on January 31, 2023.
This follows the agreement government reached with the Ghana Association of Banks (GAB), Ghana Insurers Association (GIA), and the Ghana Securities Industry Association (GSIA).
Government says a revised and final Exchange Memorandum will be released by February 2, 2023.
Speaking on the Eyewitness News, with Umaru Sanda Amadu, Mr. Hosi noted that, “Well this is not what we asked for or not, the consensus we reached with government was that it was going to make an offer to individuals. And then we can make an assessment, the process remains voluntary.”
“Subject to how the offer may work for you, you may accept it. If you don’t accept it, government will still honour its own obligation to you. When you look at the offer currently, it’s a massive improvement from what was originally on the table”.
The revised terms, he noted, “for the pensions fund, you will just be losing about 15% as against the original one of 50%, so it depends on how it works for you, it may be good. Another thing you may be looking at is your market expectations. You may be looking at a market act where the rate could really crash. When that happens the secondary market will give you a very good yield, and you may be able to exit. But these are decisions everybody would have to take”.
A statement from the Finance Ministry on January 31, 2023, noted that a number of “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”.
Stakeholders were awaiting the government’s next move given the agreements it recently reached with groups of individual bondholders and players in the banking and insurance industry.
The extension of the deadline for the debt exchange will make room for some finalised terms with subscribers of the programme.
The revised terms are as follows:
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.