3Business can exclusively report that eight foreign commercial banks operating in Ghana have signed onto the domestic debt exchange as the programme deadline elapses today.
The banks include Standard Chartered, Bank of Africa, Absa, Societe Generale, FBN, and First Atlantic.
Last week, the government and the Ghana Association of Banks agreed on an amended domestic debt exchange deal that will pay a 5% coupon for 2023 after initially offering a zero interest rate. Similar agreements were reached with insurers and securities associations.
Africa’s second top gold producer is restructuring much of its public debt, which stood at 575 billion cedis ($43.9 billion) at the end of November, to access $3 billion in funding from the International Monetary Fund.
Domestic bondholders have been invited to exchange 137 billion cedis of debt for 12 new bonds that will pay 5% interest in 2023 and higher subsequently but still below yields on the existing instruments.
While the foreign banks have accepted the offer, Ghanaian-owned banks are holding out, awaiting a revised memorandum detailing all the amendments announced by the finance ministry.
“Some of the banks that accepted the debt exchange do not hold significant government bonds. Some even sold out when they realized these problems were coming,” a senior bank official who asked not to be mentioned told 3Business.
However, banks with state participation, some of whom are already struggling, are expected to accept the amended bond offer without hesitation.
But it appears the government may have to offer better terms to convince rebelling institutional and individual bondholders to meet its target of 80% participation in the domestic debt exchange programme.
Sani Abdul-Rahman – 3Business
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