Ghana completes Eurobond debt exchange with 98.6% participation

Ghana’s Ministry of Finance has announced the successful completion of its Eurobond debt exchange and consent solicitation process, marking a significant milestone in the country’s economic recovery efforts.

Launched on September 5, 2024, the initiative aimed to restructure Ghana’s Eurobond debt and received overwhelming support, with 98.6% of bondholders participating, far surpassing the government’s 65% target. This high level of subscription reflects strong support from bondholders in Africa and international markets, exceeding international benchmarks.

The bondholder meetings held on October 3, 2024 saw over 90% of holders of 2013, 2014, and 2015 WB Guaranteed Notes pass extraordinary resolutions, ensuring the smooth progress of the restructuring. Additionally, for aggregated CAC notes, consents exceeded 98.7%, meeting the required thresholds.

Under the exchange offer, bondholders were given two options—Par and Disco—where 91% of the principal opted for the Disco menu and 7.6% chose the Par option, leaving U.S. $605 million available for future allocation.

This debt treatment resulted in a 37% reduction in the nominal value of Ghana’s Eurobond debt, equivalent to U.S. $5 billion in debt forgiveness and U.S. $4.3 billion in debt service savings during the International Monetary Fund (IMF) program. As part of the agreement, bondholders will experience a suspension of coupon payments until 2026. This non-financial clause reflects the government’s commitment to prudent debt management, transparency, and inter-creditor equity.

Minister of Finance, Dr. Mohammed Amin Adam, addressing the media, noted, “As a result of this successful debt exchange, the country will exchange $13 billion in Eurobonds for new bonds in the coming weeks.”

He highlighted that this exchange also cures Ghana’s default on international bonds, paving the way for normalised financial relationships with rating agencies and global markets. Dr. Amin Adam further emphasised the speed of Ghana’s efforts, stating, “Ghana has accomplished a remarkable milestone in its debt restructuring journey, completing its Eurobond debt exchange in under nine months.”

New bonds are expected to be issued around October 9, 2024, with U.S. $126 million in consent fees to be distributed to eligible bondholders who submitted their instructions by the early consent deadline.

This restructuring effort has also led to a significant reduction in the average interest rate on Ghana’s bonded debt, dropping from over 8% to below 5%, contributing to fiscal stability and sustainable growth.

Dr. Amin Adam lauded this achievement as a testament to the government’s unwavering commitment to restoring financial and debt sustainability while expressing gratitude to bondholders.

According to him, “this achievement positions Ghana for a brighter economic future and highlights the shared commitment to restoring economic stability.”