Ghana’s sovereign dollar bonds dropped sharply on Tuesday after a government presentation of debt rework scenarios that aimed for a haircut of 30% to 40% on the principal disappointed investors.
Ghana which produces gold, cocoa and oil, is in talks with bilateral and commercial creditors to restructure its debts during its worst economic crisis in a generation, having been locked out of international capital markets as it struggles with spiralling domestic debt costs.
Apart from the haircut, Finance Minister Ken Ofori-Atta also told investors the government was aiming for a coupon of no more than 5% and a final maturity of not more than 20 years on bonds that would be issued as part of the rework for its $13 billion of outstanding international notes.
Ghana’s proposal is the first economically sustainable proposal put forth at the G20 Common Framework,” said Kevin Gallagher, director of Boston University’s Global Development Policy Center.
“If Ghana gets upward of 40% haircut and invests in their Climate Prosperity Plan they can harness a real recovery.”