The Ghanaian government has launched a new Domestic Debt Exchange Program (DDEP) with the goal of exchanging bonds worth about US$809 million.
The initiative, referred to as the Invitation, extends an invitation to qualified holders to take part in the trade for a quantity of fresh bonds issued by the Republic.
The holders of certain domestic notes and bonds denominated in US dollars, referred to as Eligible Bonds, are invited to exchange their holdings for the newly issued bonds, known as New Bonds, in accordance with the terms of the Invitation, as set forth in an exchange memorandum that can be found on the Invitation Website.
The Memorandum contains a description of the exchange’s terms and conditions.
This exchange is a follow-up to one that was successfully completed on February 21, 2023, following a similar invitation that was issued on December 5, 2022, involving the exchange of notes and bonds denominated in Ghanaian cedis for new Republic bonds.
The domestic debt exchange program is still in place even though the previous exchange was a big step toward the government’s debt management goals.
The present invitation is unique from the previous one, the government emphasizes, and it only applies to bonds issued in US dollars and governed by Ghanaian law.
The government’s decision to start this exchange program stems from its desire to stabilize the public finances and reduce debt levels while promoting economic growth in the wake of the COVID-19 outbreak and the economic shock brought on by the conflict in Ukraine.
Through the Invitation to swap, qualified bondholders have the chance to exchange their US dollar-denominated, Ghanaian law-governed bonds for new benchmark Government of Ghana bonds.
The total principle of the new bonds, including any relevant capitalised accrued and unpaid interest, will be equal to that of the Eligible Bonds.
In comparison to the Eligible Bonds, the New Bonds will also have a longer average maturity and a lower average coupon rate.
For Ghana’s efforts to reduce its debt and ongoing program discussions with the International Monetary Fund (IMF), the success of this local debt exchange scheme is crucial.
It is anticipated that it will enable international assistance and help Ghana reach its debt goals.