Tuesday saw a significant decline in Ghana’s sovereign dollar bonds as a result of the government’s presentation of debt restructuring scenarios that disappointed investors by aiming for a haircut of between 30 and 40% on the principal.
According to Tradeweb data, several bonds dropped to their lowest point in three months, with the 2061 issue losing as much as 2.9 cents in the dollar to reach 38.9 cents. Later, the bonds made modest gains, but they were still down between 1.5 and 2.2 cents on the dollar.
The oil, cocoa, and gold-producing nation of West Africa is attempting to restructure its debts with bilateral and commercial creditors in the midst of the worst economic downturn in a generation after being shut out of global capital markets due to its mounting domestic debt burden.
In addition to the haircut, Finance Minister Ken Ofori-Atta informed investors that the government aimed to issue bonds with a maximum coupon of 5% and a maximum final maturity of 20 years as part of the debt restructuring for its $13 billion in outstanding international bonds.
Although more information was still missing, Morgan Stanley said in a note to clients that it had determined a recovery value of $38 vs the current average price of $44 on the bonds.
While more information was still lacking, Morgan Stanley said in a note to clients that it had determined a recovery value of $38 vs the current average price of $44 on the bonds.
“In our view, this proposal has little chance to be accepted by the bondholders as the eventual recovery value would be very small compared to history,” Neville Z. stated.
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