Ghana’s Debt Restructuring: Eurobond Holders Face Possible 30% Cut.

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As the government pursues a debt exchange program to meet the requirements for a loan from the International Monetary Fund, domestic bond holders will see significant interest rate reductions and a lengthening of the investment’s term (IMF).

After being shut out of the international debt markets due to a selloff of its dollar bonds that drove yields to distressed levels, Ghana is currently negotiating a US$3 billion programme with the IMF.

The cedi, the country’s official currency, has lost 57 percent of its value this year, driving up inflation to a record high of 40.4% last month and raising the cost of repaying the nation’s debts.

Similar to this, domestic institutional investors have generated cedi yields at least twice as high as domestic inflation rates, which has allowed them to generate high real yields. Another reason for government’s stance, although unspoken, is that since 2017, Eurobond holders already made a killing from their investments in Ghana.

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