By Christian Akorlie
ACCRA (Reuters) -Ghana’s finance ministry on Tuesday said that around 85% of eligible bondholders had registered for its domestic debt exchange programme, bringing it one step closer to securing a $3 billion International Monetary Fund (IMF) bailout.
The announcement followed five extensions of the scheme’s deadline, as the West African nation fought to secure its targeted 80% subscription rate. Holdouts persisted despite several revisions to the initial debt-swap offer.
Ghana is fighting its way out of a generational economic crisis by hiking interest rates at record speeds, cutting spending, and restructuring its debt as a condition to obtain support approval from the IMF’s Executive Board.
The ministry said on Tuesday that 84.91% of 97.7 billion cedis of “eligible” domestic bonds were tendered and accepted.
It also extended the settlement date of the exchange to Feb. 21 from a previously announced Feb. 14 to “provide sufficient time to settle the new bonds in an efficient manner”.
The government had initially earmarked 126.97 billion cedis ($10.67 billion) of domestic bonds for restructuring, but agreed to exempt pension funds in late December after labour unions threatened a general strike.
“The government is … grateful for the overwhelming participation of all bondholders. Your support and contributions have gotten your country much closer to securing the IMF programme,” it said in a previous statement issued in the early hours of Tuesday.
“The alternative of not executing the DDEP would have brought grave disorder in the servicing of our national debt and exacerbated the current economic crisis.”
Reaching the threshold should allow the government to settle the exchange and move on, said Stuart Culverhouse, chief economist at Tellimer.
However, with the exchange offer having undergone a number of modifications throughout several extensions, the final terms and the fiscal impact were as yet unclear, he added.
“Attention will now turn to the eurobonds, where restructuring talks are at a much earlier stage, and which could be even more complicated,” Culverhouse said.
At the end of November, a third of Ghana’s 575.7 billion cedi ($48.4 billion) debt was domestic, according to the central bank, while external debt was $29.2 billion.
Overseas bonds were trading slightly positive after the news, with most around or below the 40 cents in the dollar threshold..
Ghana became early this year the fourth nation to apply to the common framework platform, an initiative of Group of 20 major economies launched in 2020 to streamline debt restructuring efforts for poorer countries.
Its bilateral lenders are discussing the formation of an official creditor committee, a first step needed to engage in debt relief talks, sources told Reuters on Monday.
($1 = 11.9000 Ghanian cedi)
(Reporting by Christian Akorlie in Accra and Jorgelina do Rosario in London; Writing by Alessandra Prentice, Sofia Christensen and Rachel Savage; Editing by Jacqueline Wong, Kim Coghill, Cooper Inveen, William Maclean)
