Domestic dollar bonds: Debt exchange for $809m begins

Government has launched a Domestic Debt Exchange Programme (DDEP) for eligible holders of dollar-denominated domestic notes and bonds. 

Under the programme, the government is inviting holders of the old bonds to exchange approximately $809 million new bonds with lower rates and longer maturities

The new four- and five-year bonds have interest rates of 2.75% and 3.25%. 

In comparison, two old domestic U.S. dollar bonds with November 2023 and November 2026 maturities were issued at 4.75% and 6% respectively.

The invitation expires on August 4, 2023, the Ministry said in a statement on Friday. 

“Today, we are launching a similar invitation to exchange, this time in respect of the U.S.$ dollar-denominated bonds issued domestically by the Republic of Ghana and governed by Ghanaian law. 

“For the avoidance of any doubt, this Invitation is separate from the invitation to exchange launched in December 2022 and concluded in February 2023, and does not involve any cedis-denominated securities,” the statement said. 

The Ministry has set August 11, 2023, as the settlement date where the government will issue the new bonds to eligible holders whose offers were accepted for the account of such eligible holders to be credited at Ghana’s Central Securities Depository (CSD).  

“The Republic reserves the right to extend the Settlement Date (including with respect to one or more series of Eligible Bonds), subject to the conditions described in the Exchange Memorandum,” the statement noted. 

The Ministry also disclaimed that by tendering the eligible bonds, eligible holders represent and warrant that such Eligible Bonds constitute all the eligible bonds owned by them. 

The ministry also noted that such an action also serves as “a consent to the blocking by the CSD of any attempt to transfer them prior to the Settlement Date or the termination of the Invitation by the Republic.” 

Ghana Cocoa Board (COCOBOD) launched a debt securities exchange programme on the terms of the government’s exchange memorandum, under which it is inviting holders of its short-term debt securities to voluntarily offer to exchange their cocoa bills for longer-term debt securities.

Cocoa bill holders, will receive five different bonds that will mature on a one-per-year basis from 2024 to 2028.

The cocoa bills represent an aggregate principal of around GH₵‎7.93 billion the equivalent of $699 million. They would be converted into new bonds with a 13% yield, it added

The last cocoa bill issued in February 2023 had a yield of 32.22%.

The Ministry said the successful completion of the programme would help restore sound public finance and sustainable debt levels while kickstarting an economic growth after the negative impact of the COVID-19 pandemic and the war in Ukraine. 

It has therefore called for full participation in the programme which is a critical component of both the debt reduction programme and the programme discussions with the International Monetary Fund (IMF). 

“It will contribute to unlocking the support of the international community and will allow Ghana to achieve its debt targets,” the statement said. 

Government concluded the first phase of its domestic debt exchange in February – with 85% of eligible bondholders participating – but needs new terms for another GH₵‎123 billion to qualify for the next tranche of the IMF loan to address its worst economic crisis in a generation.

Government successfully swapped GH¢‎82.9 billion (GH¢‎82,994,510,128) worth of old bonds from a possible GH¢97.7 billion (GH¢97,749,624,691) under the DDEP.

The amount represents an 84.91% success rate exceeding the intended target of an 80% participation rate.

The debt comprises domestic dollar bonds, cocoa bills, local currency bonds owned by pension funds, and debt owed to the central bank and independent power producers.