Eurobond holders take $4.7bn haircut, $4.4bn cash flow relief

Ghana has reached an agreement in principle with two bondholder groups to restructure approximately $13 billion of international debt.
Under the agreement, bondholders will forego about $4.7 billion of their claims, involving a 37% effective nominal haircut, an increase from the initial 33% offer.
This aligns with the International Monetary Fund’s (IMF) program parameters for Ghana’s three-year Extended Credit Facility (ECF).
The agreement also includes providing cash flow relief of about $4.4 billion during the period of Ghana’s current financial support program with the IMF, scheduled to end in 2026.
Implementation of the agreement-in-principle is subject to mutual agreement on deal documentation and other stated conditions.
A statement issued by the Finance Ministry said the formal launch of the consent solicitation is expected in the upcoming weeks to complete a three-step debt restructuring process that commenced in December 2022.
The deal comes a week after Ghana struck another agreement with its bilateral creditors, paving the way for the IMF’s executive board to sign off on a $360 million disbursement after the second review of Ghana’s $3 billion programme.
Ghana defaulted on most of its $30 billion in external debt in 2022, following the fallout from the COVID-19 pandemic, a surge in inflation, Cedi depreciation, the war in Ukraine, and higher global interest rates, which exacerbated economic strains and made the country’s debt unsustainable.
Consequently, the country suspended payments on its external loans in December 2022 as part of the broader debt restructuring effort under the 17th IMF loan-support programme to reach debt sustainability.

GH₵61bn haircut for domestic bondholders
Overall GH₵203 billion have been exchanged in the Domestic Debt Exchange Programme (DDEP) which has resulted in debt service savings of GH₵61 billion over 2023.

$5.4bn bilateral debts
Ghana sealed a memorandum of understanding (MoU) with its bilateral creditors, including China and France, to restructure $5.4 billion of debt.
The Ministry explained that the proposed agreement on the restructuring of the Eurobonds would resolve Ghana’s default on the Eurobonds in a manner that provides significant cash flow and debt stock relief to support Ghana’s economic recovery in the context of the IMF-financed program.
Alongside debt relief, the Committee recognizes that the most important factor to support Ghana’s fiscal and debt sustainability going forward is sustained economic policy implementation to bolster macroeconomic stability, improve the investor environment, and institutionalize fiscal credibility.
In particular, the Committee welcomes the Government’s commitment to reinstate and implement an amended Fiscal Responsibility Act.
The non-financial provisions included in the agreement-in-principle, such as the semi-annual disclosure of public debt, the most-favored-creditor clause, and loss reinstatement clause, are part of the package of measures to normalize relations with bondholder investors and progress towards restoring Ghana’s international market access.
These and other key elements of the agreement-in-principle are contained in the Government’s press release.
Implementation of the agreement-in-principle is subject to mutual agreement on deal documentation and other stated conditions.
The Committee encourages all holders of the Eurobonds to carefully consider the terms of the government’s prospective offer in relation to the agreement-in-principle and make their own independent appraisal of the merits and risks of participation.
The Committee welcomed the government’s commitment to reinstate and implement an amended Fiscal Responsibility Act, aimed at ensuring macroeconomic stability and debt sustainability.
To achieve this, the Act, among other provisions, charges the government to ensure that the overall fiscal balance on a cash basis for a particular year does not exceed a deficit of five percent of Gross Domestic Product (GDP) for that year.
However, the Committee underscored the need for the country to sustain economic policy implementation to bolster macroeconomic stability, improve the investor environment, and institutionalize fiscal credibility.
Providing details on the agreement, it indicated that the non-financial provisions included a semi-annual disclosure of public debt, the most-favored-creditor clause, and loss reinstatement clause.
The Committee said these were part of the package of measures to normalize relations with bondholder investors and progress towards restoring Ghana’s international market access.
Members of the Committee include Abrdn, Amundi (UK) Limited, Grantham, Mayo, Van Otterloo & Co. LLC, Greylock Capital Management, Neuberger Berman, and Wellington Management, acting either directly or on behalf of funds or the accounts they manage.
The Committee encourages all holders of the Eurobonds to carefully consider the terms of the government’s prospective offer in relation to the agreement-in-principle and to make their own independent appraisal of the merits and risks of participation.
Negotiations with international investors holding about 40% of Ghana’s $13 billion of defaulted Eurobonds began in mid-March and resulted in an interim deal.
This involved two groups of bondholders: a group of Western asset managers and hedge funds, and another group including regional African banks.
Initially, these bondholders had agreed to a 33% effective nominal haircut and had backed down on the inclusion of value-recovery instruments, which would have tied interest payments to the country’s future economic growth.
However, the IMF noted that the “working scenario” presented by the Ghanaian government requires further consideration to fully align with the debt sustainability agreement between the IMF and Ghana.
This agreement signifies a crucial step towards stabilizing Ghana’s economy and securing the financial support necessary to implement its economic recovery plan.