Gov’t Seeks To Woo Individual Bondholders; Offers New Terms, Extends Deadline Again To Feb 7 | Economy

The government has extended the Domestic Debt Exchange Program (DDEP) for the last time to pave the way for all stakeholders to participate in the program, based on the ‘last leg’ amendment.

The Ministry of Finance, in a statement, said that the amendment requires a final extension from January 31, 2023 to Tuesday, February 7, 2023; and a new settlement date of Tuesday, February 14, 2023, which will be confirmed through a new Exchange Memorandum.

The Ministry noted that the government has made significant progress with all stakeholders, including financial sector industry associations and individual bondholder representative groups, regarding participation in the Domestic Debt Exchange Program (DDEP).

The DDEP has been touted as an important step towards achieving the country’s debt sustainability targets and restoring macroeconomic stability and economic growth.

The ministry indicated that based on engagement with representative groups of individual bondholders, several offers have been made that will form part of the new Exchange Memorandum.

It states that all individual bondholders are free not to participate; However, it is cautioned that after the successful DDEP there will be very few ‘old bonds’ in circulation, and the possibility of limiting tradability.

In this regard, the government is offering instruments with a maximum maturity of 5 years instead of 15 years, and a coupon rate of 10 percent for all individual bondholders under 59 years of age.

In addition, all pensioners – including those retiring in 2023 – will be offered instruments with a maximum life of 5 years instead of 15 years, and a coupon rate of 15 percent.

This alternative offering is intended to encourage all individual bondholders to participate in the Exchange. “Based on the agreement with the Ghana Association of Banks (GAB), the Ghana Insurers Association (GIA) and the Ghana Securities Industry Association (GSIA), the new terms of the exchange have been accepted. The revised and final Exchange Memorandum will be released on Thursday, February 2, 2023, ” part of the statement.

“In addition, discussions were concluded with the Labor and Pension Fund Supervisor, with a separate arrangement under the Memorandum of Understanding signed with Organized Labor on December 22, 2022, and in line with the government’s debt management program,” he said.

The government has encouraged all stakeholders to participate in the DDEP, an important step towards achieving debt sustainability targets and restoring macroeconomic stability and economic growth. Meanwhile, individual bondholders – especially under the umbrella of the Individual Bondholders’ Forum (IBF) – have on various occasions stated that they expect to be exempted from the program.