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.
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