Coupon, principal payments resume next month

Government has affirmed that payment of coupons and principals for old bonds will resume in March, following a successful settlement and conclusion of the Domestic Debt Exchange Programme (DDEP).

Government completed the DDEP for cedi-denominated notes and bonds issued by the state, Energy Sector Levy Act (E.S.L.A. Plc.) and Daakye Trust Plc., totalling GH¢87.76billion, in accordance with the terms and conditions outlined in the second amended and restated exchange memorandum dated February 3, 2023.

The Ministry of Finance in a statement said: “In fulfilment of the assurance given by government to bondholders who did not tender, the ministry is taking administrative steps to ensure that payments of coupons and principals of the old bonds resume by March 13, 2023”.

The ministry also noted that the newly issued bonds have been settled and listed, and will become the new benchmark for the fixed-income market. It assured that efforts will be made with relevant stakeholders, as agreed, to ensure that these new benchmark securities become the basis for deepening the domestic sovereign bond market.

“S&P Global Ratings on Friday, February 24, 2023 raised Ghana’s local currency sovereign credit ratings from selective default (SD) to ‘CCC+/C’. This acknowledges completion of the DDEP with the successful delivery of new securities to bondholders; effectively, the selective default is substantially cured,” the ministry said.

Subsequently, the S&P suggested that local currency-denominated bonds could see further upgrade if government successfully secures the proposed International Monetary Fund deal.

Government issued 16 series of new bonds to eligible holders whose tenders were accepted on February 21, 2023 – the settlement date. The principal amount of the new bonds per holder was determined by the outstanding principal amount of eligible bonds tendered by the holder, along with any accrued interest payable.

The allocation of principal amount was based on the category of each holder, as specified in the exchange memorandum. This amount was credited to their securities account at the Central Securities Depository (CSD), from where the eligible bonds were tendered.

All tenders that were accepted by government led to the electronic cancellation of eligible bonds issued by government at the CSD on the settlement date. However, eligible bonds issued by E.S.L.A. Plc. and Daakye Trust Plc. were transferred to government, the holder of such bonds, on the settlement date.

On the settlement date government also executed the new bond documentation, which comprised the new deed of covenant that established and issued the new bonds – along with the terms and conditions governing the new bonds attached to it, and the pricing supplement specific to each series of new bonds. Copies of the new bond documentation are accessible on the dedicated websites of the Ministry of Finance, the CSD and the invitation website.

The ministry said the DDEP milestone is further expected to accelerate engagement with the country’s external creditors.

“The government of Ghana also takes this opportunity to assure our external creditors of their equal importance to the Republic of Ghana. We will therefore continue working together to advance the progress of our external debt treatment, in order to ensure Ghana’s long-term macroeconomic stability,” the ministry said.