Ghana has issued new bonds to investors in exchange for existing ones, successfully completing a lengthy restructuring process aimed at ensuring its loans are more sustainable under an International Monetary Fund (IMF) program.
According to a note from Barclays Plc to its clients, the country issued the new bonds on Wednesday. The Finance Ministry of Ghana did not respond to requests for comment.
As part of the deal, investors received new instruments worth $9.4 billion in exchange for their old bonds, with holders given the option to choose between two alternatives: DISCO or PAR options, as stated by the government earlier this week.
Those selecting the DISCO option accepted a 37% reduction in value, commonly referred to as a haircut, and received two new Eurobonds maturing in 2029 and 2035. These bonds will pay an interest rate of 5% from this year through July 2028, increasing to 6% thereafter.
Meanwhile, those who opted for the PAR option received a 1.5% security due in 2037, with no haircut.
All investors also received a zero-coupon bond maturing in 2030 to compensate for interest payments defaulted from December 2022 through the end of 2023, as well as another zero-coupon security maturing in 2026 as an advance payment from the Ghanaian government.
Barclays commented that the yield ranges of the new bonds appear broadly fair in light of a mixed fundamental outlook. The securities maturing in 2029 and the 2030s occupy an “attractive spot” within the sub-Saharan Africa CCC/B-rated bond market and are likely to appeal to investors seeking shorter-dated investments.
Almost two years ago, Ghana suspended payments on most of its external debt and initiated a debt restructuring process to qualify for a $3 billion IMF program.
The West African nation has restructured $13 billion of Eurobonds, $5.1 billion of bilateral loans, and 203.4 billion cedis ($12.8 billion) of domestic debt during this period.
Ghana’s restructuring deal has been praised as one of the swiftest under the Group of 20’s Common Framework, which aims for equitable treatment between sovereign lenders and bond investors.
In contrast, it took Zambia nearly four years to issue two series of restructured notes to investors.
