As stated in the 2023 budget announcement, Ghana’s debt levels have reached unsustainable levels, posing challenges for the country to secure a bailout from the International Monetary Fund (IMF), leading to the necessity for debt restructuring.
In December 2022, the government initiated a domestic debt exchange program, inviting bondholders to exchange their existing bonds for new ones with revised maturity dates. Despite facing strong opposition, a remarkable 85% of bondholders agreed to participate in the Invitation to Exchange.
This accomplishment was crucial as it fulfilled one of the requirements set by the IMF. However, to secure the first tranche of the $3 billion loan from the IMF, the government needed to meet other conditions, including securing assurances from external creditors.
Upon receiving the necessary assurance, the IMF’s Executive Board approved the first tranche of the loan in May.
Now, in preparation for the second tranche, expected in November, the government has launched two additional debt restructuring programs, aiming to restructure bonds worth up to GH¢809 million.
The domestic debt exchange program enables the government to call for bondholders to swap their current bonds for new ones with extended maturity dates. This approach is taken because the government faces challenges in meeting both principal and interest payments for bonds that have matured or are scheduled to mature this year.
By extending the maturity dates and adjusting the interest rates for the new bonds, the government seeks to create a manageable repayment schedule and provide some breathing space to meet its payment obligations.
The two new “haircuts” are for holders of dollar bonds and holders of COCOBOD’s short-term securities i.e., cocoa bills.
See the invitations sent out by the government for the new haircuts below:
COCOBOD’S INVITATION
The Ghana Cocoa Board (COCOBOD) has, today, launched a debt securities exchange programme (the Exchange Programme) under which it is inviting holders of its short-term debt securities (the Cocoa Bills) to voluntarily offer to exchange their Cocoa Bills (representing an aggregate principal of approximately GHS 7.93 billion) for longer-term debt securities with averagely lower coupon rates to be issued by COCOBOD (the Bonds).
The Bonds will be issued pursuant to the terms of (the Programme Documents):
(a) an exchange memorandum dated 14 July 2023 (the Exchange Memorandum);
(b) a trust deed dated 14 July 2023 and entered into between COCOBOD (as issuer) and Consolidated Bank Ghana Limited (CBG) (as trustee for the holders of the Bonds); and
(c) an agency agreement dated 14 July 2023 and entered into by COCOBOD (as issuer), CBG (as bond trustee and paying bank), and the Central Securities Depository (GH) LTD (as transfer agent, calculation agent, and registrar in respect of the Bonds).
Holders of the Cocoa Bills whose offers are accepted by COCOBOD will receive five (5) different Bonds with an aggregate principal amount (rounded down to the nearest GHS 1.00) equal to the principal amount of Cocoa Bills tendered (in addition to any accrued and unpaid interest due on such Cocoa Bills). The five (5) Bonds will mature on a one-per-year basis consecutively from (and including) 2024 to (and including) 2028. The reasons for undertaking the Exchange Programme have been explained by the chief executive of COCOBOD in a letter dated 11 July 2023 from the chief executive to all holders of the Cocoa Bills. A copy of the letter has been included in the Exchange Memorandum.
For further details regarding the Exchange Programme, all holders of the Cocoa Bills are advised to read the contents of the Programme Documents carefully and consult a dealer, investment adviser or other professional for appropriate advice before making an investment decision. Copies of the Programme Documents are available at https://projects.morrowsodali.com/CocobodDDE, https://calbank.net/CocobodDDE and the website of COCOBOD (i.e. https://cocobod.gh/CocobodDDE).
Offers may be submitted from today (i.e. 14 July 2023) until 4pm on 31 July 2023 (unless otherwise extended by COCOBOD in its sole discretion and with the prior approval of the Securities and Exchange Commission). An offer (once made) cannot be revoked or withdrawn at any time except in the limited circumstances described in the Exchange Memorandum.
This announcement is for informational purposes only and is not an invitation to exchange to any holders of the Cocoa Bills. The invitation to exchange the Cocoa Bills is only being made pursuant to the Exchange Memorandum.
COCOBOD has appointed CalBank Plc (CAL) as arrangers for the Exchange Programme.
DOLLAR DENOMINATED BONDS