Domestic Debt Exchange: Government amends terms, pushes back expiration date again

The government of Ghana has amended the terms of the domestic debt exchange programme and also pushed back the expiration date from the end of this year to early next year.

A press statement from the ministry of finance dated Saturday, 24 December 2022, said: “The government, today, announces its decision to extend the Expiration Date of the Invitation from Friday, December 30, 2022, at 4 pm (GMT) to Monday, January 16, 2023, at 4 pm”.

“The Settlement Date for the Invitation is now expected to occur on Tuesday, January 24, 2023, or as soon as practicable thereafter, but no later than the Longstop Date which is now scheduled for Tuesday, January 31, 2023, unless further extended by the government under the Invitation”, the ministry added.

“The Announcement Date is now expected to occur on or about January 17, 2023,” the statement further announced.

Also, the government has modified the terms of the programme as follows:

Offering accrued and unpaid interest on Eligible Bonds, and a cash tender fee payment to holders of Eligible Bonds maturing in 2023;

Increasing the New Bonds offered by adding eight new instruments to the composition of the New Bonds, for a total of 12 New Bonds, one maturing each year starting January 2027 and ending January 2038;

Modifying the Exchange Consideration Ratios for each New Bond. The Exchange Consideration Ratio applicable to Eligible Bonds maturing in 2023 will be different than for other Eligible Bonds;

Setting a non-binding target minimum level of overall participation of 80% of the aggregate principal amount outstanding of Eligible Bonds; and

Expanding the type of investors that can participate in the Exchange to now include Individual Investors.

“These modifications will be set forth fully in an Amended and Restated Exchange Memorandum which is expected to be published during the week of 26th December 2022. Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the Amended and Restated Exchange Memorandum,” the ministry noted.

The government launched the programme on December 5, 2022.

Accordingly, the government invited holders of approximately ¢137.3 billion of the principal amount outstanding of some of Ghana’s domestic notes and bonds issued by the Government, E.S.L.A. Plc or Daakye Trust Plc to exchange their Eligible Bonds for a package of new bonds to be issued by the government.

The government then extended the expiration date to Friday, December 30, 2022, and the settlement date to Friday, January 6, 2023.

Per the memorandum, the government “reserves the right, in its sole discretion, to extend the timetable for the Invitation at any time and to make amendments to the Invitation at any time”.

“Any Eligible Holders whose Eligible Bonds are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominees must contact such entity if it wishes to participate in the Invitation, as such entities may establish an earlier deadline to receive instructions to tender Eligible Bonds,” the Finance Ministry said.

It noted at the time: “In making this decision to extend and the modifications described herein, the Government considered feedback from the financial sector about the need to secure internal approvals”.

“Further, this extension affords the Government of Ghana the opportunity to consider suggestions made by all stakeholders with the aim of adjusting certain measures acceptable within the constraints of the Government’s Debt Sustainability Analysis.”