GHANA has reached an agreement with banks to restructure 15 billion Ghana cedis ($1.36bn) of domestically issued US dollar bonds and cocoa bills, according to sources close to the negotiations. The West African nation aims to finalise new terms for the restructuring of its domestic debt by the end of June in order to meet a deadline set by the IMF and focus on negotiations with external creditors.
In February, Ghana completed the first phase of its domestic debt exchange, with 85 percent of eligible bondholders participating. However, the country requires new terms for an additional 123 billion Ghana cedis ($11.18bn) in order to qualify for the next tranche of a $3bn IMF loan, which is crucial for addressing its severe economic crisis.
The debt to be restructured includes domestic dollar bonds, cocoa bills, pension funds, and debt owed to the central bank. Cocoa bills are securities issued to fulfil the short-term liquidity needs of Ghana’s cocoa regulator, Cocobod.
Sources from the finance ministry and a bank holding some of the bonds revealed that the government and lenders have agreed to convert 6.9 billion Ghana cedis worth of domestic US dollar bonds into two term loans with lower interest rates. Additionally, 8.1 billion Ghana cedis worth of cocoa bills will be converted into a new bond with a yield of 12 percent, although some banks are pushing for 13 percent. Notably, the most recent cocoa bill issued in February 2023 had a yield of 32.22 percent.
The finance ministry declined to comment on the matter, while Cocobod and a lobby group representing the banks did not respond to requests for comments.
According to the sources involved in the negotiations, the new loans will have a five-year maturity starting from 2025. They requested anonymity as they are not authorised to speak publicly.
Ghana, known for its exports of gold, cocoa, and oil, defaulted on most of its external debt in December. As part of an IMF bailout secured in May, the country aims to reduce its external debt interest payments by $10.5bn over the next three years.
A memorandum of understanding for the restructuring of the domestic US dollar bonds is currently under review by the securities and exchange commission. ‘Our target is to conclude it by the end of June,’ stated one of the sources from the finance ministry.
‘The banks understand that they are better off getting a restructuring because we may not be able to pay the coupon,’ added another source from the finance ministry, emphasising the necessity of the restructuring agreement.
