Finance Minister Urges Bondholders to Accept $13.1 Billion Eurobond Restructuring Terms

Finance Minister Dr. Mohammed Amin Adam has called on bondholders to accept the terms for restructuring $13.1 billion owed to Eurobond holders. Speaking at the 11th Edition of the Paris Forum in France, themed “For Successful Debt Treatment for Future Investment Summit,” Dr. Amin Adam announced that Ghana will soon launch a consent solicitation to formalize the agreement in principle for the Eurobond debt restructuring.

“We remain committed to engaging and resolving our non-bonded commercial indebtedness,” Dr. Amin Adam stated.

On June 24, 2024, the committee representing Ghana’s Eurobond holders revealed that it had reached a preliminary agreement with the Ghanaian government on restructuring the Eurobond debts. This agreement is aimed at providing significant cash flow and debt relief to support Ghana’s economic recovery under the IMF-financed program. Earlier this month, a similar deal was reached with bilateral creditors to restructure $5.1 billion.

The agreed term sheet indicates that bondholders could face a 37 percent “haircut” on their bonds. The government is offering two options for investors: the PAR and DISCO options. Under the PAR option, there is a limit of $1.6 billion. Consenting holders choosing the DISCO option will receive three new instruments: Bond Short, Bond Long, and Down Payment Bond. If they choose the PAR option, they will receive a Par Bond.

Dr. Amin Adam also discussed plans for a sinking fund to enhance Ghana’s future debt service capacity. “We understand that sinking funds should not be debt-carrying funds but should use other routes, such as in the case of Ghana,” he said. The sinking fund will be financed through excess revenues from the Stabilization Fund from petroleum revenues, improved financial management of state-owned enterprises, rechanneled dividends, and budgetary allocations from increased revenue mobilization.

“Moving forward, securing financing solutions will be crucial to sustaining economic growth while maintaining fiscal stability,” Dr. Amin Adam noted. He emphasized the government’s commitment to fiscal discipline and structural reforms, which are essential for re-establishing trust with creditors.

“Ghana also remains committed to implementing other measures that will maintain credibility in these debt restructuring efforts,” he added.

The Finance Minister expressed gratitude to bilateral and multilateral partners for their financial assistance and facilitation of the restructuring process. He acknowledged the challenges but highlighted the success of the comprehensive restructuring achieved in record time.

Dr. Amin Adam concluded that finalizing this deal positions Ghana as an attractive destination for foreign direct investment. He stressed that the development can yield mutually beneficial outcomes for Ghana and its international partners, fostering sustainable economic growth and development. He also pointed out that this landmark deal demonstrates confidence in Ghana’s leadership and the administration’s ability to steer economic recovery, marking a significant achievement as it is the first time in recent memory that a debt restructuring has been requested and concluded by the same administration.

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