Ghana completes $253m bond swap as debt restructuring nears finish

Ghana has completed a $253.2 million bond exchange, moving a step closer to ending one of Africa’s biggest sovereign debt restructuring programmes and restoring confidence in its economy after the 2022 debt default.

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The transaction covers bonds issued in 2014 through Saderea Designated Activity Company, an Irish special purpose vehicle created to raise money for Ghana’s healthcare sector. The government said the exchange became effective after every bondholder agreed to participate, removing the need for contingency measures that had been built into the restructuring plan.

Under the agreement, the existing bonds have been cancelled and replaced with two new instruments. Investors received $116 million in new notes maturing in 2035 and $39 million in new notes due in 2037.

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The 2035 notes carry a step up interest structure, with coupon payments increasing over time, while the 2037 notes pay a fixed annual coupon of 1.5 percent.

“The successful completion of this exchange represents another important milestone in Ghana’s debt restructuring process,” the government said in a statement, adding that full participation by bondholders simplified the transaction by eliminating the need for additional settlement arrangements.

The latest exchange builds on progress made in June, when creditors holding more than two thirds of the outstanding bonds accepted the proposed terms, exceeding the threshold required to make the restructuring binding on all investors.

The deal is one of the final pieces in Ghana’s broader effort to repair its public finances after the country defaulted on most of its external debt in December 2022. The crisis followed sharp increases in global interest rates, soaring inflation after the Covid 19 pandemic and growing fiscal pressures that pushed borrowing costs higher.

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Since then, the government has been negotiating with commercial creditors alongside reforms backed by the International Monetary Fund to restore debt sustainability and stabilise the economy.

In March, S&P Global Ratings said Ghana had reached agreements in principle covering about 97 percent of the debt included in the restructuring programme, signalling that the process was approaching completion.

With the latest bond exchange now completed, Ghana has cleared another major hurdle in its effort to emerge from its debt crisis and return to a more stable financial footing.