In a move to complete domestic debt restructuring under the ongoing International Monetary Fund (IMF) bailout programme, the Ghanaian government has extended an invitation to Pension Funds to exchange GHS 31 billion of old bonds for new ones. The Finance Ministry issued a statement, explaining that the invitation aims to help Pension Funds preserve their patrimonial value while providing them with Bonds offering more potential liquidity.
Eligible holders participating in the invitation will receive Exchange Bonds of the Government based on the terms and conditions described in the Exchange Memorandum. The outstanding bonds issued in February 2023 will be exchanged for new ones maturing in 2027 and 2028, with both instruments paying a 5% coupon in cash during 2023 and 2024, with the remainder being capitalized into the nominal amount of the two bonds to comply with the cash constraints and macro-framework defined under the IMF agreement.
The alternative offer has been designed to achieve the same average maturity as pension funds’ current holdings of old bonds, while achieving a better average coupon and alleviating cash constraints for the government during the initial years after the exchange. The offer aims to preserve the net present value of pension funds’ current holdings of old bonds at a 21% discount factor. Eligible holders’ submission of offers commenced on July 31 and will end on August 18, 2023, with a possibility of extension. The settlement date is scheduled for August 25, 2023, but it may be extended by the government, provided the new longstop date is not later than August 28, 2023.
