Debt restructuring: Govt, foreign investors engage as investment losses loom - Report

Reports have indicated that the government has begun consultation with international investors on possible debt restructuring programmes as the country continues talks with the International Monetary Fund.

According to myjoyonline.com, at least four different advisory firms are working with the Ghanaian government on an economic policy and debt management concerning Ghana’s negotiations with the IMF.

The four firms are investment bank, Lazard, law firm, Hogan Lovells, sovereign advisory firm, Global Sovereign Advisory, and investment banking and advisory firm, Lion’s Head Global Partners.

The report however added that no mandates have been formalized yet.

The report further said Bloomberg recently reported that US-based Fidelity Institutional Asset Management, Goldman Sachs Group Inc, and London-based Pimco were top holders of Ghana’s dollar-denominated bonds, which lost half of their value this year.

“Boston-based Fidelity holds $94.5 million of Ghana’s dollar bonds, followed by Goldman Sachs Group Inc. at $72.2 million and Pimco with $68.5 million,” the report said.

Meanwhile, analysts have suggested Ghana needs to make a crucial decision to address its current debt issues as it moves to adopt a debt restructuring that will cushion debt holders.

Carlos de Sousa, a Portfolio Manager at Vontobel Asset Management in Zurich, which holds Ghana debt told Bloomberg that a “Harsh restructuring can only be accepted if there’s also a credible and strict fiscal adjustment.”

“If the government proposes a harsh restructuring but a soft fiscal adjustment that will be perceived as putting the burden on creditors,” he added.

Also, Charlie Robertson, Global Chief Economist at Renaissance Capital said: “I think the markets may end up welcoming this dose of realism from Accra – especially as it will help bring the IMF on board.”

He added, “it built up debt due to excessively large deficits — budget and current account — for many years, and avoiding this would have required stringent austerity in 2021 and an IMF deal then.”

SSD/MA