Government announces settlement of dollar-denominated DDEP

Government has announced the successful settlement of the Domestic Debt Exchange Programme (DDEP) in respect of the its U.S. dollar-denominated bonds. 

A release issued by the Ministry of Finance said the successful result was a significant achievement for the government as it pursues its macroeconomic stabilisation policies under the IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG)/.

It explained that the settlement was made pursuant to the terms and conditions set forth in the Exchange Memorandum dated 14th July 2023.

The government in July this year launched a second round of DDEP which included a programme to restructure dollar denominated bonds totaling about US$809 million.

The successful completion of this aspect of the domestic debt exchange programme is very crucial to the country ‘s quest to restore debt sustainability which is a critical component of the IMF programme.

Domestic debt exchange

Ghana’s economy has been battling with severe challenges in the last two years, with inflation hitting a 22-year high of 54.1 per cent in December 2022, and an unsustainable public debt of GH¢575.7 billion, which represents 93.5 per cent of the country’s GDP.

In July 2022, the government formally approached the IMF for a fund programme and was able to secure a staff level agreement in December.

An Executive Board level approval which would pave the way for the disbursement of the US$3 billion support, was, however, dependent on the country’s ability to restructure both its domestic and external debt.

The Domestic Debt Exchange Programme which was announced by the government in December was met with stiff opposition from stakeholders but after months of engagements, the government was finally able to reach an agreement with its domestic debtors.

The DDEP saw the government swap a total of GH¢82 billion of old bonds for 12 new ones at a reduced coupon rate and longer tenor.

The government has however indicated in recent times that the domestic debt restructuring was still not yet over as it seeks to restructure cocoa bills and US dollar denominated bonds.

At the end of 2022, the country’s total domestic debt was around GH¢259 billion and so far the government has been able to restructure GH¢82 billion, which means that over 50 per cent of the domestic debt is yet to be restructured.

Below is the full statement from the Ministry of Finance:
THE GOVERNMENT ANNOUNCES THE SETTLEMENT OF ITS U.S.$-DENOMINATED DOMESTIC DEBT EXCHANGE PROGRAMME
Accra, Ghana, 7th September 2023…… The Government of Ghana announces the successful settlement and conclusion on Monday, 4th September 2023 (the “Settlement Date”) of its Domestic Debt Exchange Programme (DDEP) in respect of the Government’s U.S.$-denominated bonds. This successful result is a significant achievement for the Government as it pursues its macroeconomic stabilization policies under the IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG). The settlement was made pursuant to the terms and conditions set forth in the Exchange Memorandum dated 14th July 2023 (the “Exchange Memorandum”). Capitalised terms used but not defined herein shall have the meanings ascribed thereto in the Exchange Memorandum.
2.         The Government announces the aggregate principal amount of each Series of New Bonds, which amounts, together with the corresponding ISINs, are set forth in Appendix A attached hereto.
3.         On the Settlement Date, four (4) Series of New Bonds were issued to Eligible Holders whose tenders were accepted by the Government. Pursuant to the Exchange Memorandum, the principal amount of the New Bonds per holder is composed of the outstanding principal amount of Eligible Bonds tendered by such holder plus any amount of Accrued Interest Payable in respect thereof, and was allocated per holding in equal proportions between New Bonds due 2027 and 2028 pursuant to the Exchange Memorandum. Please note that the respective allocations between New Bonds due 2027 and 2028 are also distributed between Foreign Exchange Account (“FEA”) new Series and Foreign Currency Account (“FCA”) new Series in proportion with each holding of FCA and FEA Eligible Bonds tendered. On the Settlement Date, such principal amounts were credited to each holder’s respective securities account at the Central Securities Depository (“CSD”) from which each holder’s Eligible Bonds were tendered.
4.         Pursuant to the Exchange Memorandum, all tenders accepted by the Government resulted in electronic cancellation of such Eligible Bonds at the CSD on the Settlement Date. 5.         On the Settlement Date, the Government signed and issued the Pricing Supplements for each New Bond pursuant to the Deed of Covenant of the Republic of Ghana dated 21st February 2023, under which the New Bonds were constituted and issued. Copies of the New Bond Documentation have been made available on the dedicated websites of the Ministry of Finance (https://mofep.gov.gh/news-and-events/debt-operations) and the CSD (https://www.csd.com.gh/dde), and on the Invitation Website (https://projects.morrowsodali.com/ghanadde). Moreover, copies of the New Bond Documentation have been made available for inspection by holders of New Bonds at the CSD.