Ghana’s Eurobond holders are expected to forego some US$4.7 billion of the debt owed them by the country, and provide additional cash flow relief of approximately US$4.4bn to support debt sustainability efforts.
This is as a result of the agreement-in-principle reached between the government and the Eurobond holders on the treatment of the country’s US$13bn debt to external creditors.
“Under the Agreement in Principle, Bondholders would forego approximately US$4.7 billion of their claims and provide cash flow relief of approximately US$4.4 billion during the IMF program period,” the agreement term sheet stated.
While the members of the International Committee currently own or control some 40 percent of the outstanding bonds, all other Regional Steering Committee members, jointly own or control about 15 percent of the outstanding bonds.
The two concessions, totalling US$9.1bn are, therefore, to assist the country to achieve the debt relief required to restore debt sustainability under the US$3bn International Monetary Fund (IMF) loan-support programme.
Under the terms, bondholders accepted nominal losses of 37 percent on their holdings, with two alternatives ‘DISCO’, and ‘PAR’ to choose from.
Bondholders who opt for DISCO would receive a five percent interest rate on new bonds from January this year until July 2028 and six percent, thereafter.
On the other hand, bondholders who go for the PAR option would get a 1.5 percent interest rate on new bonds without any haircuts.
Meanwhile, the agreement-in-principle has required the Government to ensure certain other creditors did not receive better net present value terms, and publish certain public debt information on a semi-annual basis.
Also, a loss reinstatement until 2032 upon certain events, an estoppel provision that precludes the government from raising legal challenges to the new bonds and liquidated damages are required.
This provision in the agreement-in-principle would be applicable in the event of a Supreme Court ruling of invalidity of the new bonds under the country’s law.
All these are happening ahead of the IMF Executive Board meeting on Friday, June 28, 2024, to consider Ghana’s second review programme, approval of which would lead to the disbursement of US360 million to the country.
