GHANA has taken a crucial step towards addressing its financial woes by entering into non-disclosure agreements (NDAs) with international bondholders, signalling the initiation of formal negotiations to restructure over $13bn of international bonds. This move comes in the wake of the West African nation’s default on most of its external debt in December 2022, as it grapples with its most severe economic downturn in generations.
According to three undisclosed sources speaking to Reuters, the government of Ghana has begun discussions with its major bondholders under NDAs, temporarily restricting them from trading the notes in exchange for non-public information for a minimum of two weeks. Notably, this development follows the recent appointment of Mohammed Amin Adam as the new finance minister in February.
The creditor group includes prominent names such as BlackRock, Amundi, Greylock, and Abrdn. However, Ghana’s finance ministry has yet to provide official comments on these developments.
Ghana’s debt restructuring efforts aim to alleviate the burden of external debt repayments and interest costs, totalling $10.5bn from 2023 to 2026, as part of an International Monetary Fund (IMF) $3bn reform programme. The country seeks to restructure a total of $20bn out of its approximately $30bn external debt, as revealed in a government presentation to investors.
Despite previous setbacks and disagreements between Ghana and its bondholders, including discussions of potential haircuts, the latest talks mark a significant step forward. The country had previously reached an agreement in principle in January to rework $5.4bn of loans with official creditors under the Common Framework, established during the Covid-19 pandemic by the Group of 20 economies.
Ghana’s Eurobonds, consisting of 15 international dollar bonds with maturity dates from 2023 to 2061, witnessed a surge in price following the announcement of formal talks. However, most bonds still trade at distressed levels, reflecting ongoing concerns about the country’s economic stability.
In light of these developments, Ghana’s efforts to secure debt relief and navigate its economic challenges remain in the spotlight, with the outcome of the negotiations holding significant implications for the country’s financial future.