Ghana launches offer for $13 billion Eurobond

Ghana invited holders of roughly $13 billion of its international bonds to swap their holdings for new instruments on Thursday, more than two months after reaching a preliminary agreement with two bondholder groups.

The "exchange offer and consent solicitation" was launched in a statement on the London Stock Exchange.

The gold and cocoa producer 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.

It is overhauling its debt under the G20 Common Framework, which has seen Zambia and Chad also reach agreements. Ethiopia is expected to be next, but the setup has been widely criticised for being slow and cumbersome.

Bondholders will have the chance to swap their holdings for a so-called "disco" bond, offering an interest rate of 5% climbing to 6% after mid-2028, and with maturities across three instruments ranging between 2026-2029.

Foregoing $4.7 billion

That option will come with a writedown of principal of 37%.

The second is a par bond option capped at $1.6 billion with three instruments, of which the main one will pay a coupon of 1.5% and mature in 2037 with no haircut apart from a writedown of past due interest. The offer will last for 21 days.

The agreement will see Ghana's bondholders forego about $4.7 billion of their loans and provide cash flow relief of about $4.4 billion up until 2026 when the country's current International Monetary Fund programme ends.

Godfred Bokpin, an economist and finance professor at the University of Ghana, said Thursday's announcement was an important milestone in the country's restructuring efforts.

"With this, investors now have a fair understanding of their losses and they can move on,'' he told Reuters news agency.

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