Ghana secures debt restructuring agreement with Eurobond holders; investors to take 37% haircut

The government of Ghana has successfully negotiated an agreement in principle on the terms of debt restructuring with Eurobond investors, involving approximately $13 billion of debt.

As stated by the advisers to the international creditor committee and the government, Eurobond holders have agreed to a nominal haircut of 37%.

Additionally, creditors have the option to choose between two payment instruments, one offering an initial 5% interest rate and the other a 1.5% interest rate.

"The proposed agreement on the restructuring of the Eurobonds will resolve Ghana’s default on the Eurobonds in a manner that provides significant cash flow and debt stock relief to support Ghana’s economic recovery in the context of the IMF-financed program," the statement said.

"Alongside debt relief, the Committee recognizes that the most important factor to support Ghana’s fiscal and debt sustainability going forward is sustained economic policy implementation to bolster macroeconomic stability, improve the investor environment and to institutionalize fiscal credibility," it added.

The Committee however stated that the agreement in principle is subject to mutual agreement on deal documentation and other stated conditions.

Having suspended debt payments in 2022, Ghana has now defaulted on around $30 billion of its external debt.

Since March 2024, Ghana has been in formal negotiations with two groups of international bondholders for debt restructuring. However, these talks failed to meet the debt sustainability analysis requirements set by the International Monetary Fund (IMF).

Subsequently, Ghana presented a revised proposal to its international bondholders, leading to an agreement in principle being reached.

The country is now awaiting approval from the IMF Executive Board for the disbursement of the third tranche of bailout funds, totaling $360 million under the three-year IMF Extended Credit Facility program.

The IMF Board is scheduled to convene on June 28, 2024, to address this issue.



MA