Stakeholders of Ghana’s Eurobond have put up a creditor committee after the announcement of the Finance Ministry of plans to suspend payments on foreign debts.
The Committee is encompassed with representative from various group of investors as mutual funds, asset managers, insurance firms, hedge funds, and family offices.
The committee in a statement yesterday, announced the steering members of the committee will be Abrdn, Amundi (UK) Limited, BlackRock, Greylock Capital Management and Ninety One
It continued, “The Committee is focused on the orderly and comprehensive resolution of Ghana’s debt challenges, recognizing that such resolution will require fair burden-sharing and collaboration among the Ghanaian authorities, private creditors (both domestic and international) and official sector creditors.
“The Committee welcomes the authorities’ ongoing engagement with the International Monetary Fund (the “IMF”) and the recent announcement of the Staff Level Agreement.”
It stated the Committee holds that a process of good faith negotiation would avoid unilateral actions and would require, inter alia, the timely exchange of detailed economic and financial information among the committee, the Ghanaian authorities and the IMF, and would need to be anchored in reasonably feasible economic adjustment by the Ghanaian authorities.
It added to that effect the Committee endorses the Institute of International Finance’s Principles for Stable Capital Flows and Fair Debt Restructuring, which provide efficient know-how for successful sovereign debt exchange.
The statement further observed the Committee aims at securing a result that is both equitable to creditors, responsive to the economic and social challenges facing Ghana.
It indicated a key factor in measuring the success of Ghana’s debt resolution would be the timely restoration of international market access, which stands critical for Ghana to meet its development objectives.
The Committee therefore appointed Orrick, Herrington & Sutcliffe LLP as legal advisor and Rothschild & Co as
financial advisor.
The move was inspired by the announcement made by the government on Monday that it has suspended payments on most of its external debts, effectively defaulting as the country struggles to plug its cavernous balance of payments deficit.
Finance Minister, Ken Ofori-Atta, noted it will not service debts including its Eurobonds, commercial loans and most bilateral loans, calling the decision an “interim emergency measure”, while some bondholders criticised a lack of clarity in the decision.
“The government stands ready to engage in discussions with all of its external creditors to make Ghana’s debt sustainable”, Mr Ofori Atta explained.
He said the suspension of debt payments reflects the parlous state of the economy, which led the government last week to reach a $3-billion staff-level agreement with the International Monetary Fund (IMF).
Ghana had already announced a domestic debt exchange programme and said that an external restructuring was being negotiated with creditors.
The Iternational Monetary Fund has directed a comprehensive debt restructuring was a condition of its support.
Ghana has been struggling to refinance its debt since the start of the year after downgrades by multiple credit rating agencies on concerns it would not be able to issue new Eurobonds.
The country’s public debt stood at 467.4 billion Ghanaian cedis ($55 billion as per Refinitiv Eikon data) in September, of which 42% was domestic.
It accrued a balance of payments deficit of more than $3.4 billion in September, down from a surplus of $1.6 billion at the same time last year.
