Deadline for debt exchange may be extended again – Joe Jackson

Director of Operations at Dalex Finance, Joe Jackson is hopeful of another extension of the deadline for the domestic debt exchange programme to make room for some finalised terms with subscribers of the programme.

The deadline for the Domestic Debt Exchange (DDE) Program is expected to expire today, Tuesday, January 31, 2023, after several extensions.

Stakeholders are eyeing the government’s next move given the agreements it recently reached with groups of individual bondholders and players in the banking and insurance industry.

“Even though the deadline is [today], those who have to make a decision do not have the terms to finalise. So it will come out [today]. If it does, it leaves pretty little time for final examination. The devil is always in the detail. I really do think that, the deadline may be extended by a few days.”
Updates so far

Government reached an understanding of the terms for participation in the DDE with the Ghana Securities Industry Association, Ghana Insurers Association and Ghana Association of Banks.

Bondholders will now enjoy a 5% coupon in 2023 and not the zero percent as initially announced.

It includes among other things, collective Investment Schemes (CIS) and individuals who hold bonds in Trust Accounts with Securities and the Exchange Commission (SEC) approved firms, would be offered any enhanced commercial terms agreed with, or exemptions granted to, Individual Bondholders.

There is also clarity on the operational framework and terms of access to the Ghana Financial Stability Fund and the removal or amendment of all clauses in the Exchange Memorandum that empowers the Republic to, at its sole discretion, vary the terms of the Exchange.

In the case of the groups of individual bondholders, they have suggested fiscal adjustments including the divestiture of loss-making, defunct and troubled 17 State–own enterprises.

But Joe Jackson believes, although the government has a difficult situation ahead, individual bondholders are very likely to be exempted from the debt exchange.

“Government has more than enough to go without the individual bondholders. It took the decision and found a diplomatic way of excluding the individual bondholders by saying that it would like them to sign on but if they don’t, it will not default. The government has to be realistic and take the hard decision to reduce expenditure as we have advocated, but it is going to be a tough one.”