Ghana talks with bondholder committee about restructuring eurobonds

By Marisa Wong

Los Angeles, April 15 – The government of the Republic of Ghana held private discussions with the members of the steering committee of the ad hoc creditor committee of international bondholders and with members of the steering committee of the creditor committee of regional bondholders regarding the potential treatment of the republic’s eurobonds, according to a Monday press release.

The talks took place between March 16 and April 12.

The members of the international committee currently own or control about 40% of the outstanding bonds. The members of the regional steering committee and all the members of the regional committee currently jointly own or control about 15% of the outstanding bonds.

During those private discussions, the government, the regional steering committee and the international steering committee discussed a joint working debt treatment scenario.

The regional steering committee is in agreement with the broad structure of the joint working scenario but expressed reservations on some of its parameters and rejected the financial parameters of the par option (described below) as it currently stands.

The government has consulted with the International Monetary Fund to assess whether this joint working scenario would be compatible with IMF program parameters.

The IMF staff has indicated to the government that the joint working scenario – taken together with debt treatment assumptions for other commercial creditors – would lead to breaches to the debt sustainability thresholds under the framework.

As part of the IMF’s ongoing review process, including an assessment of Ghana’s strong program performance and improving growth outlook, the government is actively working on solutions that it believes would be consistent with IMF program parameters under the set of policies currently being discussed, with the objective of reaching a mutual agreement acceptable to all parties.

During the discussions, the government and representatives of the steering committees also considered non-financial provisions that the respective committee members indicated they consider to be an integral part of a proposed restructuring.

These provisions include a debt incurrence clause, a most favored creditor clause, a loss reinstatement clause, a debt disclosure clause and two additional clauses that the international steering committee said are necessary to provide legal safeguards in the event of legal and judicial challenges to the new bonds – a clause limiting the legal challenge rights of the republic and a clause providing for liquidated damages in the event of a Ghana Supreme Court ruling of invalidity of the new bonds under Ghanaian law.

In Monday’s press release, the government thanked all representatives from the two steering committees for their constructive participation over the past three weeks.

Joint working scenario

All holders have the choice between the par and disco option, up to a limit of $1.6 billion for the par option.

If a consenting holder chooses the disco option, that consenting holder would receive three new instruments: a short bond due July 2030, a medium bond due July 2035 and a long bond due July 2038. The allocation under the disco option per $1,000 original face value is $283 of short bonds, $320 of medium bonds and $67 of long bonds. Each of those exit instruments carries a coupon of 5% from Jan. 1, 2024 until July 1, 2027 and 6½% after that.

Otherwise, a consenting holder would receive on a par-for-par basis a 1½% par bond due January 2043.

The effective nominal haircut is 33% under the disco option and 0% under the par option.

In addition to that, any consenting holder (under both options) would receive a 0% PDI bond due January 2030 and a consent fee. For each $1,000 original face value, a holder would receive an accrued amount until Dec. 31, 2023 of the PDI bond, representing a 33% nominal haircut, and a $10 consent fee.

Existing debt

The press release listed the following ISINs:

• 7.88% bonds due August 2023 (ISIN: XS0956935398);

• 0% bonds due April 2025 (ISIN: XS2325742166);

• 8.13% bonds due January 2026 (ISIN: XS1108847531);

• 6.38% bonds due February 2027 (ISIN: XS2115122538);

• 7.88% bonds due March 2027 (ISIN: XS1968714110);

• 7¾% bonds due April 2029 (ISIN: XS2325748106);

• 7.63% bonds due May 2029 (ISIN: XS1821416234);

• 10¾% bonds due October 2030 (ISIN: XS1297557412);

• 8.13% bonds due March 2032 (ISIN: XS1968714540);

• 8.63% bonds due April 2034 (ISIN: XS2325747397);

• 7.88% bonds due February 2035 (ISIN: XS2115141751);

• 8.88% bonds due May 2042 (ISIN: XS2325747637);

• 8.63% bonds due June 2049 (ISIN: XS1821416408);

• 8.95% bonds due March 2051 (ISIN: XS1968714623); and

• 8¾% bonds due March 2061 (ISIN: XS2115147287).

The government was advised by Lazard Freres and Hogan Lovells, acting respectively as financial and legal advisers.

The international steering committee was advised by Rothschild & Cie and Orrick, Herrington & Sutcliffe LLP, and the regional steering committee was advised by Renaissance Capital Africa.

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