Eurobond holders’ acceptance of 30% to 40% haircut is significant – Analyst

An Associate Professor of Finance at Andrews University in Michigan, Williams Peprah, has said it is important for Eurobond holders to accept the debt exchange proposal presented by Ghana.

According to him, the holders have not received any payments from the beginning of the year, therefore, it will be a good decision to take the haircuts instead of losing their monies.

“So, this is very significant if the Euro bondholders would buy into this. I know this is a dollar-denominated investment, so most of them accept first a haircut, it's something that is really going to affect them. But it is better than losing their money or the government refusing to pay.

“So, for almost eight months that they have not received any coupon payments or principal payments, it is affecting their portfolios, so such negotiations are very important,” he said as quoted by myjoyonline.com.

The Minister of Finance Minister, Ken Ofori-Atta, told investors in London that Eurobond holders may face a nominal haircut of between 30% and 40% as part of the restructuring of the country’s external debt.

He said, “So in our indicative scenario, the restructuring terms for bondholders involve maybe a nominal haircut between 30 and 40%, looking at maybe coupons of not more than 5% and final maturities of not more than 20 years are sort of the contours of what we are discussing and analyzing.”

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