Domestic Debt Exchange Deadline Extended Again
The deadline for the Domestic Debt Exchange (DDE) programme of the government has been extended for the third time to make allowance for consultation, the Minister for Finance, Ken Ofori Atta has announced.
The programme was first scheduled to end on Monday, December 19, however, it was extended to December 30 with a contemplated settlement date of Friday, January 6, 2023.
At the time, it was reported that no financial institutions had taken up the offer, but the Finance Ministry said the extension was to help the financial sector secure internal and Executive Board approvals to take up the Exchange offer.
On December 24, the Finance Ministry announced the second extension after excluding pension funds from the programme and including individual bonds.
The programme was then extended to January 16, 2023.
In a tweet on Monday, the Office of the Finance Minister announced the third extension following opposition by individual bondholders.
He noted that consultation is ongoing and therefore, the expiration for the offer has been extended to the end of January.
“Building consensus is key to a successful economic recovery for Ghana. Pending further stakeholder engagement with institutional and individual investors, recently invited to join the debt exchange programme, the government is extending the expiration of the DDE to Jan 31, 2023.”
Building consensus is key to a successful economic recovery for Ghana. Pending further stakeholder engagement with institutional and individual investors, recently invited to join the debt exchange programme, government is extending the expiration of the DDE to Jan 31, 2023.
— Office of the Finance Minister-Ghana (@oofmghana) January 16, 2023
The Ghana Individual Bondholders Forum has estimated 88.2% and 71% losses at current T-bill and inflation rates respectively if the DDE is taken up.
“But today, our coupons face absolute haircuts and when we discount your proposed benchmark bonds at the coupon rates of the original bonds, we are effectively losing 50% of our investments. When discounted at current T-bill rates, we are losing 71% of our investments, and at prevailing inflation, we face an 88.2% loss”.
It added, “With your set target of 80% of eligible bonds, Individual Bondholders are not a critical success factor to the viability of the DDE programme as you envisage, yet the impact of their inclusion has incalculable consequences. Please exclude us and save 1.3 million livelihoods and dependents from shackled penury”, it added.
It emphasised that the DDE proposed for Individual Bondholders takes away their liberty to “self-sustain, mocks hard work, and robs us of legally acquired property”, which doesn’t reflect the “tenets of good governance”.
But a leading member of the New Patriotic Party (NPP), Gabby otchere Darko believes the country has to compromise to make way for the IMF programme.
“If the no-compromise opposition to it wins, what then has been achieved? It may lead to national debt default. So what then happens to the value of your bonds after! Potentially worthless. If participation is low, we jeopardize resolving the economic crisis and hardships.”
(3) If the no-compromise opposition to it wins, what then has been achieved? It may lead to national debt default. So what then happens to the value of your bonds after! Potentially worthless. If participation is low, we jeopardize resolving the economic crisis and hardships.
— Gabby Otchere-Darko (@GabbyDarko) January 15, 2023
He later disclosed that the consultation referred to by the Finance Minister involves engagement with representatives of individual bondholders.
“4 key issues/developments here: 1 Govt is engaging reps of individual stakeholders. 2. There is no credible alternative to the debt exchange programme. 3. Individual bondholders deserve much better protection than currently on offer. 4. There will still be some shared pain”, he captioned retweeted update from the Office of the Finace Ministry.
4 key issues/developments here: 1 Govt is engaging reps of individual stakeholders. 2. There is no credible alternative to the debt exchange programme. 3. Individual bondholders deserve much better protection than currently on offer. 4. There will still be some shared pain. https://t.co/GglWMqBXtP
— Gabby Otchere-Darko (@GabbyDarko) January 16, 2023
Source: opemsuo.com/Hajara Fuseini
