Deadline for individual bondholders in Domestic Debt Exchange Programme: ends today
Deadline for individual bondholders in Domestic Debt Exchange Programme: ends today

Deadline for individual bondholders in Domestic Debt Exchange Programme: ends today

The deadline for individual bondholders to assent to the governments invitation to the Domestic Debt Exchange Programme(DDEP) ends today.

Reports, however, reaching the Daily Graphic indicate that the response has been extremely poor with millions of bondholders refusing to sign on, a development confirmed by some banks.

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It is not clear what the government’s response to the development will be but it is likely to force another postponement of the deadline for further consultations.
Some bondholders, since the announcement of the DDEP, have maintained their call on the government to stick to its initial intention to exempt them from the programme.

Message to bondholders

Last Thursday, some commercial banks in the country issued messages to their individual bond holders to subscribe to the government's DDEP .

One of such messages the Daily Graphic has accessed read; “In pursuant to the Minister of Finance’s directive on the Domestic Debt Exchange Programme, we wish to inform you of the addition of individual holders as eligible.

"Please note that this exercise is purely voluntary and if you would like to participate, kindly use your CSD ID … via this link … This link expires on Thursday, January 12, 2023.”

The message also provided telephone numbers for further clarification.

Groups

As the deadline approached, groups formed by the bondholders emerged to intensify pressure on the government to rescind its decision.

One of such groups, the Pensioner Bondholder Forum, whose membership is in excess of 400 pensioners, implored the government to desist from adding its members to the programme.

The forum, which also serves as the mouthpiece of all pensioners across the country with investments in government bonds, held a press conference last Wednesday to voice their frustrations.

The convener, a former Director-General of the Securities and Exchange Commission (SEC), Dr Adu Anane Antwi, stated at the press conference that the petition was delivered to the Minister of Finance and the President.

The pensioners maintained that their monthly pensions from SSNIT had been eroded by inflation to the extent that the coupons they received from their investment in government bonds had become their core income while waiting for the payment of the principal amount upon maturity.

“It is important to note that the periodic coupon payment is what pensioners use to cater for the day- day- demands on them, such as feeding, buying their regular medications for their chronic health problems, paying other medical bills, paying school fees of children, paying electricity and water bills, taking care of dependants, paying transportation, accommodation and related expenses, and meeting expenses relating to their social engagements and other miscellaneous expenses,” they affirmed.

Another group, Ghana Individual Bondholders Forum, formed by the immediate past Chief Executive Officer of the Bulk Oil Distribution Companies (BDCs), Senyo Hosi, is soliciting the signatures of individual bondholders to petition the government on the matter.

As at yesterday, more than 30,000 bondholders had signed on according to Mr Hosi, who has described the position of the government as one not in the interest of the people.

He told the Daily Graphic that the pressure would be maintained and asked all affected to sign on to the group to increase the numbers.

Exposure

Individual bondholders in the country at the time of the announcement was said to be about six million.

Total amount in government bonds amounts to some GH¢8 billion.

New arrangement

On December 5, 2022, the government, in its quest to address what has now become an economic crisis, launched a domestic debt exchange pursuant to which it invited certain holders of approximately GH¢137.3 billion of principal amount outstanding of certain of its domestic notes and bonds issued by the government, E.S.L.A. Plc or Daakye Trust Plc to exchange their Eligible Bonds for a package of new bonds to be issued by the government.

The expiration date was December 19, 2022.

However, the government subsequently announced an extension of the expiration date to Friday, December 30, 2022 and the settlement date to Friday, January 6, 2023.

Among many other issues, including the various agitations from labour and the financial services sector, the government, on December 24, announced its decision to extend the expiration date of the invitation from Friday, December 30, 2022 to Monday, January 16, 2023 at 4:00 p.m.

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Per a press release, circulated by the Ministry of Finance, the settlement date for the invitation is now expected to occur on Tuesday, January 24, 2023, or as soon as practicable thereafter, but no later than the longstop date which is now scheduled for Tuesday, January 31, 2023, unless further extended by the government pursuant to the invitation.

The announcement date per the release is now expected to occur on or around January 17, 2023.

New terms

In addition to the foregoing extensions, the government announced the following modifications to the Invitation to Exchange, which are set forth in further detail on a Term Sheet:

Offering accrued and unpaid interest on eligible bonds, and a cash tender fee payment to holders of eligible bonds maturing in 2023; Increasing the new bonds offered by adding eight new instruments to the composition of the new bonds, for a total of 12 new bonds, one maturing each year starting January 2027 and ending January 2038; Modifying the Exchange Consideration Ratios for each new bond.  The Exchange Consideration Ratio applicable to eligible bonds maturing in 2023 will be different from other eligible bonds; Setting a non-binding target minimum level of overall participation of 80 per cent of aggregate principal amount outstanding of eligible bonds; and expanding the type of investors that can participate in the exchange to now include individual investors.

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These modifications, the release said, would be set forth fully in an amended and restated exchange memorandum which is expected to be published during the week of December 26, 2022. Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the amended and restated exchange memorandum.

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