Domestic debt exchange programme likely to reach 78% of target – Prof Williams Peprah says

According to US-based Professor of Finance at Andrews University, Williams Peprah, Ghana’s Domestic Debt Exchange Programme is likely to reach between 75% to 78% of its target, with the majority of its success coming from institutional investors.

In an interview with Accra-based Joy FM, Professor Peprah explained that over 82% of the government’s debt portfolio is in the hands of institutional investors and only 1.3% is in the hands of pension funds, which were exempt from the programme.

He went on to say that reaching 70% of the target would be a good outcome for the government’s quest to restructure the country’s debt, and added that his analysis of the data suggests the programme has been largely successful.

The administrative deadline for the Domestic Debt Exchange Programme ended on February 10, 2023 and reports indicate that the government achieved just above its target.

IBF: Next phase of advocacy aims to secure payment of coupons, matured bonds

Meanwhile, Convener of the Ghana Individual Bondholders Forum, Senyo Hosi, has revealed the next phase of the advocacy of the Forum.

According to Senyo Hosi, the next phase of advocacy for the Forum is to demand of government, when coupon payments and matured bonds will be honoured.

Speaking during a Twitter Space Conversation on Sunday, February 12, 2023, Convener of the Forum, Mr Hosi averred the Forum is now going to push for the payments of coupons and matured bonds to individual bondholders.

“The next phase of advocacy is to know when bonds that are due will be honoured and paid by the government.

“For this phase, its no longer about fighting for exemption because that has been granted, for now its about pushing for bonds to be honoured by government and when that will be done,” he quipped.

“So investors should be patient and not panic, doing so will only put investors into a frenzy which is not the best,” he added.

The Forum has disclosed its review of  Government’s revised Domestic Debt Exchange Programme  its impact on individual bondholders and collective schemes.

The technical committee found that while the impact may vary depending on individual portfolios, estimated losses ranged from 18.7% to 45.4%.

“Since the analysis was made on the entire eligible bonds portfolio based on a  Weighted Average Coupon Rate 19.225%, the impact may vary for each unique  individual portfolio. That notwithstanding, the evaluation estimated the loss of  value for the various categories of IBs as follows: 

1. Category A – 33% 
2. Category B – 18.7%  
3. Category C – 45.4%  

“The estimated losses are compounded by the lower legal protections afforded  holders of the new bonds key among which is the blanket immunity from  execution and attachment of Diplomatic or Military assets, assets located in  Ghana and dedicated to public and government use which Government gains in  addition to assets under PRMA ACT815,” it posited.

The Forum warned that the implications of this proposal pose a danger to the Ghanaian economy, which could experience a significant loss of loanable funds and severe social consequences due to the disproportionate allocation of the burden to reduce the size of government debts.

Furthermore, the Forum noted that the new bonds come with lower legal protections, including a blanket immunity from execution and attachment of assets dedicated to public and government use, which could negatively affect individual bondholders.

Source: norvanreports.com