By Maxwell Akalaare Adombila
ACCRA (Reuters) – Ghana has reached an agreement in principle with its bondholders to restructure $13 billion worth of international debt, three sources told Reuters, after finalising a deal with official creditors earlier this month.
Bondholders will take a haircut on principal of up to 37% and maturity of the bonds lengthened, two of the sources said on Thursday.
Ghana’s dollar bonds rallied on the Reuters report, with the 2027 bond rising to its highest price since 2022, Tradeweb data showed.
The West African gold and cocoa producing nation defaulted on most of its $30 billion of international debt in 2022, as the strain of the COVID-19 pandemic, war in Ukraine and higher global interest rates tipped it into crisis after years of overspending.
Like fellow African defaulter Zambia, Ghana also signed up for the G20’s so-called ‘Common Framework’, a process designed to facilitate quick debt overhauls and to bring the newest large bilateral lender, China, into the process.
Zambia has been finalising its restructuring in recent weeks and for Ghana “things are pretty close,” one source said. “We can expect an announcement by next week,” they added, asking not to be named because they were not authorised to speak to media.
The other two sources said the announcement could come as soon as Friday.
Ghana’s finance ministry and the Paris Club, an alliance of largely Western creditor nations, did not immediately respond to requests for comment.
FINISHING LINE IN SIGHT
Banking analysts at Tellimer said the 37% writedown bondholders were expected to take as part of the deal was probably at the “upper-end” of its expectations.
The world’s No.2 cocoa producer started formal talks with two groups of its bondholders in March – a group of Western asset managers and hedge funds and another set including regional African banks.
The negotiations, however, stalled in April after the proposed deal failed to meet the International Monetary Fund’s (IMF) debt sustainability requirements.
The three sources said the plan has been tweaked to fit a revised IMF debt framework that has recently been shared with bondholders, meaning the agreement in principle has been struck.
Earlier this month, Ghana also finalised an agreement with its official sector creditors initially struck in January.
The outlines of the agreement paved the way for the IMF executive board to hold a June 28 meeting on Ghana to consider a second review of its $3 billion loan, three-year package and the release of the next tranche of $360 million.
(Additional reporting by Duncan Miriri in Nairobi and Marc Jones in London; Editing by Alessandra Prentice, Shri Navaratnam, Jamie Freed and Alexander Smith)
