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Fund managers, custodians reject debt swap programme

BY: Business Desk Report
Winston Nelson Jnr, GSIA President

The Ghana Securities Industry Association (GSIA) says it is unable to accept the debt exchange programme (DEP) launched on December 4.

It said the programme, which aims to freeze interest and principal payments worth GH¢137 billion, was done unilaterally and also not in the interest of the industry and the customers whose funds its members manage.

“We believe a bond is a contractual agreement between a borrower and a lender (bondholders) and, therefore, any changes to the terms must be agreed to by both parties,” the GSIA said in a statement issued on December 7.

The association, therefore, asked the investing public to exercise restrain while it engages the Ministry of Finance on the matter.

The association comprises firms in the investment space, including investment dealers, investment advisors, fund managers, registrars and custodians.

Difficult situation

The GSIA said it understands the difficult crossroads the nation finds itself in and the difficult choices that need to be made to set the economy on the path to debt sustainability.

“However, we are unable to accept the bond exchange programme announced by the Minister of Finance in its present form,” it stated.

Way forward

It said it would engage the ministry on its concerns and reservations. “We, therefore, urge the investing public to continue to have confidence in us as we pursue this process.

“In this vein, we entreat clients of our member firms to allow us to engage and then communicate the outcomes to enable them to take the best decision on their investments,” the GSIA said.

Membership

The statement recalled that the association was informed that the government of would conduct a debt sustainability analysis and potentially restructure its debt as a pre-condition for accessing support from the International Monetary Fund (IMF).

It said the GSIA was engaged on the proposed programme.

It said the five-member consultative committee on financial sector stakeholder engagement was constituted, comprising representatives from the banking and industries, capital markets and the Chamber of Corporate Trustees.

It said the consultative committee’s mandate was to lead discussions with the financial services industry and other stakeholders to provide industry-wide inputs and transmit industry feedback on the debt management strategy to the Ministry of Finance and the Bank of Ghana (BoG).

“We were, therefore, surprised when on December 2, 2022, we were invited to a meeting at the BoG during which the bond exchange programme was presented to us and subsequently launched on December 5, 2022.

“We believe a bond is a contractual agreement between a borrower and a lender (bondholders) and, therefore, any changes to the terms must be agreed to by both parties,” it said.