Ghana Eurobond holders to forgo about $4.7bn of their claims

AFRICAN BUSINESS AND ECONOMYJune 24, 2024 at 6:35 PM UTC

TLDR

Ghana reaches $13 billion debt restructuring agreement with private creditors, leading to bond rally and nominal losses of 37% for investors.
Investors agree to forego $4.7 billion of claims and provide $4.4 billion in cash flow relief during IMF loan program.
Agreement in principle includes significant concessions from bondholders while delivering essential debt relief to the government.

Ghana has reached an agreement in principle with private creditors to restructure around $13 billion of debt, marking a significant step in the country’s efforts to overhaul its loans as we reported earlier.

Following the announcement, the nation’s bonds rallied, and according to a statement from advisers to an international creditor committee and the government, investors have agreed to nominal losses of 37% on their holdings.

This means bondholders will forego $4.7 billion of their claims while also providing about $4.4 billion in cash flow relief during an International Monetary Fund loan program. "The agreement in principle entails important concessions from bondholders while providing the required debt relief to the government," the statement said.

Key Takeaways

The announcement marks a significant milestone since Ghana unilaterally suspended payments on external loans and began a debt overhaul in December 2022 to meet conditions for a $3 billion IMF program. This follows the IMF's rejection of an earlier agreement between the government and bondholders in April, which failed to meet debt-sustainability requirements. Earlier this month, Zambia secured a similar arrangement with investors, enabling the southern African nation to issue two series of restructured notes after nearly four years of default. Ghana’s 2027 bonds surged, becoming top performers in emerging markets after Monday’s announcement. The price of debt due in March 2027 increased by 0.3 cents to 52.69 cents on the dollar, potentially closing at the highest level since August 2022.

Ghana

Eurobond

IMF

Economy

GDP

Debt Crisis

Sovereign Credit

Debt Default

Eurobonds

Dollar Bonds