Ghana has unveiled a significant restructuring proposal for approximately $13 billion of its international bonds, offering bondholders the opportunity to exchange their existing securities for new instruments. This announcement comes more than two months after the country reached a preliminary agreement with two major bondholder groups. Investors have until September 30 to accept the offer, but those who agree by the earlier deadline of September 20 will benefit from a 1% consent fee, as detailed in the government’s recent communication.
This restructuring initiative is part of Ghana’s broader effort to manage the economic challenges that led to its default on much of its $30 billion international debt in 2022. The default was driven by the impacts of the COVID-19 pandemic, the ongoing conflict in Ukraine, and escalating global interest rates, which created severe financial strain.
The debt overhaul is being conducted under the G20 Common Framework, a mechanism designed to facilitate debt restructuring for heavily indebted countries. While Zambia and Chad have already reached agreements under this framework, and Ethiopia is anticipated to follow suit, the process has faced criticism for its sluggish pace and complex procedures.
In response to Ghana’s proposal, a committee of international bondholders has voiced support, stressing the importance of sustained economic reforms to restore Ghana’s access to international financial markets. Additionally, a regional bondholder group, which holds over 25% of the affected bonds, has endorsed the restructuring offer and committed to investing in Ghana’s economic recovery and development. This support reflects a broader commitment to helping Ghana navigate its financial challenges and foster long-term economic stability.
Bondholders are being offered the chance to exchange their existing securities for a new “disco” bond, which will initially provide an interest rate of 5%, increasing to 6% after mid-2028. These bonds will have maturities from 2026 to 2029 and will involve a 37% reduction in principal.
An alternative option is a par bond, with a cap of $1.6 billion, including three instruments. The main bond will offer a 1.5% coupon and will mature in 2037, with no reduction in principal other than adjustments for overdue interest. This option will be available for 21 days.
This restructuring plan will result in bondholders forgiving approximately $4.7 billion of debt and will grant Ghana about $4.4 billion in cash flow relief until 2026, when its current International Monetary Fund program concludes. The restructuring is seen as a significant development in Ghana’s financial recovery, providing investors with a clearer picture of their losses and aiding in the country’s economic stabilization. As Ghana moves forward with these changes, the success of this restructuring will be closely watched by financial markets and stakeholders.
The government has announced that the new bonds will be issued on October 9. For investors holding the Ghana 2030 international bond, which is partially guaranteed by the World Bank and part of the current restructuring effort, the guaranteed payment will be processed on the same day or shortly after. This payment is intended to ensure that those affected by the restructuring receive their due compensation promptly, aligning with the overall timeline of the bond issuance.
