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Ghana, bondholders finalize preliminary $13 billion debt agreement

Published

5 months ago

June 25, 2024

Ghana announced on Monday that it had reached the final stages of a debt reform, becoming the second African nation this month, after reaching an agreement in principle with two bondholder organizations to restructure over $13 billion of its debt.

Under the terms of the agreement, bondholders in Ghana will forfeit around $4.7 billion of their loans, resulting in approximately $4.4 billion in cash flow relief until 2026, when the country’s current International Monetary Fund (IMF) programme ends.

“The formal launch of the consent solicitation is expected in the upcoming weeks,” the proposal, if approved, would allow the nation to avoid default, the administration stated, alluding to the process of presenting the proposal to all of its bondholders.

The initial information about the agreement, which will essentially equate to a 37% “haircut” in the bond market, was released by Reuters on Thursday.

The accord was deemed “a significant positive step” for Ghana by the IMF. The committee on behalf of its foreign bondholders declared that it would provide a route for the nation’s economic recuperation.

Following Ghana’s recent arrangement with its bilateral creditors and another slow-moving restructuring in Zambia earlier this month, the deal was made quickly.

The 18 months Ghana took “has been much faster” than Zambia’s, according to S&P Global Market Intelligence analyst Theo Acheampong, and this could help the country recover. A request for response was not answered by the Paris Club of Creditor Nations, which typically handles communications for official creditors.

However, the government noted that the official creditor committee, which is co-chaired by China and France, considered the deal to be a reasonable starting point for discussing its “Comparability of Treatment” concept, which is an analysis meant to make sure bondholders don’t receive too favourable conditions.

Bondholders now own two choices. One is a “disco bond,” with maturities spanning from 2026 to 2029 and an interest rate of 5% that will increase to 6% after mid-2028. It involves a 37% haircut or write-down of “principle.”

The second is a $1.6 billion par bond option with three instruments, the principal of which will mature in 2037 with no haircut other than a write-down of past-due interest and pay a 1.5% yield.

The government stated that about a different bond that is partially guaranteed by the World Bank, the unprotected section will be regarded similarly to the other portion of the nation’s bonds, and the multilateral lender will completely pay the guaranteed portion to investors.

Related Topics:Bond Holders Featured Ghana

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IMF mission concludes 4th loan program assessment in Egypt

Published

35 minutes ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.