Eurobond debt exchange achieves 98.6% participation

Government has announced the successful conclusion of its Eurobond debt exchange and consent solicitation process, marking a critical milestone in the country’s ongoing efforts toward economic recovery and financial stability.
With over 90% bondholder approval at meetings held on October 3, 2024, holders of the 2013, 2014, and 2015 World Bank-Guaranteed Notes endorsed the restructuring process. Additionally, more than 98.7% of bondholders of Aggregated Collective Action Clause (CAC) Notes expressed consent, cementing the necessary support to move the exchange forward.
This substantial achievement in restructuring Ghana’s Eurobond debt has been hailed as a key victory in the country’s drive toward debt sustainability, paving the way for future financial stability and economic recovery.
Minister of Finance Dr Mohammed Amin Adam announced this at a press conference in Accra
A major success in economic recovery
The Eurobond debt exchange was launched on September 5, 2024, as part of a broader effort to restructure Ghana’s Eurobond obligations.
Eligible bondholders were invited to swap their existing bonds for new ones under two primary options: the “Par Option,” which offered no nominal haircut but lower interest rates, and the “Disco Option,” which included a 37% nominal haircut but higher interest rates and shorter tenors.
By the time the final expiration deadline passed on September 30, 2024, a remarkable 98.6% of bondholders had participated, representing nearly the entire principal amount of the outstanding bonds.
The exceptional level of participation far surpassed the 65% threshold required for the program’s success. Ultimately, 91% of bondholders opted for the Disco option, while 7.6% chose the Par option.
This outcome allowed Ghana to reissue $13 billion in new bonds, effectively curing its default on international bonds and marking a new chapter in its fiscal recovery.
By normalizing relationships with international capital markets and rating agencies, the restructuring sets the stage for future economic stability.

Looking ahead: A path to economic stability
With the completion of the Eurobond debt exchange, Ghana has successfully restructured more than 90% of its eligible external debt.
This success has been achieved in under nine months, demonstrating the government’s dedication to swiftly and decisively tackling its financial challenges.
As the government continues to navigate its path toward long-term economic stability, this accomplishment serves as a stepping stone toward a brighter and more prosperous future for all Ghanaians.
The restructuring will support broader efforts to stabilize the country’s finances, reduce its debt burden, and improve relations with international financial institutions.

Key features of the debt exchange
The Ministry of Finance has outlined several critical components that contributed to the success of the debt exchange:

Fair burden sharing
The debt exchange process was rooted in an agreement reached in June 2024 with bondholder representatives, ensuring fair burden sharing across domestic, official, and commercial creditors.
This inclusive approach helped secure widespread support from bondholders.
Flexible Investor Options
Bondholders were given two main options:
Par Option: No nominal haircut, lower interest rates (1.5%), and a longer maturity date in 2037.
Disco Option: A 37% nominal haircut, higher interest rates (5%-6%), and shorter tenors maturing between 2029 and 2035.

Compensation for interest arrears
Both options included provisions for bondholders to receive compensation for any interest arrears owed up to December 2023 through Post-Default Interest (PDI) Notes.
This feature ensured that bondholders were compensated for missed payments during the default period.

Consent fees
As part of the restructuring package, bondholders who submitted their instructions by the early consent deadline are set to receive $126 million in consent fees.
This incentivized early participation and contributed to the high levels of engagement in the process.

The newly issued bonds are expected to be distributed on or around October 9, 2024, with full settlement to follow shortly thereafter.
In the meantime, trading of existing Eurobonds, including those not exchanged, has been suspended until the final settlement is complete.
A step forward in the IMF programme
The successful Eurobond debt exchange is a critical component of Ghana’s broader debt restructuring efforts under its ongoing programme with the International Monetary Fund (IMF).
The restructuring has delivered significant financial relief to the government, with $5 billion in debt relief achieved through the 37% reduction in the nominal value of Ghana’s debt.

Lower interest rates
The debt exchange has reduced the average interest rate on Ghana’s bonded debt from over 8% to below 5%, providing additional relief to the national budget.
Over the duration of the IMF programme, the restructuring is expected to save the government $4.3 billion in debt service costs, helping to reduce the country’s debt-to-GDP ratio.
Prior to the restructuring, Ghana’s debt-to-GDP ratio was projected to reach 109% by 2028. However, thanks to both the Domestic Debt Exchange Programme (DDEP) and the agreements with external creditors, including the Eurobond exchange, this figure is now expected to fall to 55% by 2028, meeting the IMF’s sustainability target.

Innovative non-financial clauses
In addition to the financial benefits, the debt exchange agreement includes innovative non-financial clauses that demonstrate the government’s commitment to responsible debt management.
These clauses, which are gaining recognition as new market standards, include a “Loss Reinstatement Clause” to protect bondholders in the event of a future default and an “Information Sharing Clause” to ensure the timely publication of debt-related data.
A testament to strong cooperation
The Ministry of Finance expressed its gratitude to bondholders for their cooperation and sacrifice in supporting the debt restructuring process.
The steering committee of bondholders and their advisors were also commended for facilitating the agreement, which the Ministry described as a major step toward closing a significant chapter in Ghana’s debt restructuring journey.
“This success reflects the strong support of Ghana’s bondholder community across Africa and international markets,” the Ministry stated. “It demonstrates a shared commitment to restoring the country’s economic stability and building a brighter future for all Ghanaians.”
As Ghana continues on its path toward financial recovery, the successful completion of the Eurobond debt exchange marks an important achievement, signaling renewed confidence in the country’s economic future