Ghana fails to restructure $13bn Int. bonds | Ghana has failed to strike a deal with two bondholder groups to restructure $13 billion of international bonds, the government said on Monday, in a blow to its efforts to swiftly emerge from default and economic crisis.
Talks were derailed for now after the International Monetary Fund (IMF) indicated that the deal would not fit its debt sustainability parameters, which set out how much debt it thinks a country can afford, the government said in a statement.
Ghana had been in formal talks with two groups holding its international bonds since March 16 – one “international” group of Western asset managers and hedge funds and another one including regional African banks.
The regional African bondholder group had also rejected part of the proposed rework, including an option to retain the original value of the bonds with a longer maturity and lower coupon.
In December 2022, Ghana defaulted on most of its external debt of about $30 billion as it fell into economic crisis. Debt costs and inflation surged, reserves dwindled and the government found itself unable to access international bond markets.
Growth in the world’s second biggest cocoa producer has since started to recover, with the economy growing 2.9% in 2023, better than the 2.3% the IMF predicted in January.
“The Government is actively working on solutions that it believes would be consistent with IMF program parameters under the set of policies currently being discussed, with the objective of reaching a mutual agreement acceptable to all parties,” the government said in the regulatory statement.
The dollar-denominated bonds, known as eurobonds, fell between 2.6 and 3.2 cents, with most of the maturities trading between the 46 and 48 cents in the dollar mark, according to Tradeweb data. XS1968714540=TE
Regional bondholders believe the Ghanaian economy’s strong performance compared to the IMF’s original analysis of its debt sustainability could a pave the way to a deal by the end of 2024, Samuel Sule, Chief Executive Officer at Renaissance Capital Africa and financial advisor to the group, told Reuters.
The IMF approved a $3 billion, three-year loan program to Ghana in May 2023, contingent on Ghana undergoing reforms and finishing a debt restructuring that the fund deems sustainable.
Ghana’s government said the IMF had assessed the proposed bondholder deal against debt sustainability thresholds from the first review of the loan program, which was finished in January. The second review, in which thresholds could change, is ongoing.
An advisor to the international bondholder committee said in a statement that restructuring discussions would continue this week. (CNBC)
Ghana fails to restructure $13bn Int. bonds | AviationGhana
