The government of Ghana has announced the reopening of its Domestic Debt Exchange Programme, providing an opportunity for investors who did not participate in the program earlier this year. This move is aimed at accommodating bondholders who missed the previous offering in February, with a particular focus on holders of E.S.L.A. Plc and Daakye Trust bonds.
In a statement released by the Finance Ministry, the government acknowledged that many bondholders were unable to participate in the initial offering within the designated timeframe, leading to their exclusion. The government believes that reopening the program will provide value to these bondholders, allowing them to participate in the exchange.
The statement further explained that the new bonds, including new tranches, are expected to be more liquid than the eligible bonds due to a larger investment base and the benchmark size of the new bonds.
This move reflects the government’s commitment to addressing the needs of bondholders and optimizing the management of domestic debt. It offers investors a renewed opportunity to participate in the exchange program and potentially benefit from the increased liquidity of the new bonds.
Below is the full statement
PRESS RELEASE
FOR: IMMEDIATE RELEASE
THE GOVERNMENT ANNOUNCES THE REOPENING of THE Domestic Debt Exchange TO GIVE HOLDERS WHO could NOT PARTICIPATE AN opportunity TO TENDER
ACCRA, Wednesday, 13th September 2023 … The Government announced today that it is reopening its invitation to the exchange that settled in February 2023 (the “February 2023 Exchange”) and is therefore once again inviting holders of the domestic notes and bonds of the Republic of Ghana, E.S.L.A. Plc and Daakye Trust Plc that are specified in Appendix A attached hereto (the “Eligible Bonds”) to tender their holdings of the Eligible Bonds in exchange for a package of New Tranches (as defined below) of the same new bonds that were issued by the Government (the “New Bonds”) as part of the February 2023 Exchange (such invitation hereinafter referred to as the “Invitation”). The terms and conditions of the Invitation are described in the exchange memorandum dated today (the “Exchange Memorandum“) and available at https://projects.morrowsodali.com/ghanadde and https://mofep.gov.gh/news-and-events/debt-operations (the “Invitation Websites”).
- 2. The terms of this Invitation are identical to the terms of the February 2023 Exchange except that the relevant dates for this reopening exercise have changed as indicated below and in the Exchange Memorandum, and this reopening contemplates a payment of the first coupon on the new instruments as if tendered in the February 2023 Exchange to tendering bondholders (except to those tendering Eligible Holders who received coupon payments on their Eligible Bonds after 21st February 2023, who instead will receive a cash payment equal to the interest accrued on their Eligible Bonds from and including such last coupon payment date to but excluding 22nd August 2023).
- We are aware that a number of holders of Eligible Bonds did not participate in the February 2023 Exchange on time and, as a result, were left with their holdings of the Eligible Bonds. Mindful of this development, we are proceeding with an administrative reopening of the February 2023 Exchange.
- We believe that there is value for bondholders to participate in this Invitation. Indeed, the New Bonds (which will include the New Tranches) are expected to be more liquid than the Eligible Bonds, considering the larger investment base and the benchmark size of the New Bonds. In addition, the Government could under certain circumstances prioritise payments on the New Bonds over payment on the Eligible Bonds. Participation in this administrative reopening would also further improve the cashflow position of the Government and further support debt sustainability.
Summary of the Invitation
- The Invitation is available only to registered holders of Eligible Bonds that are not Pension Funds (as defined below) (“Eligible Holders”), except that if you have tendered Eligible Bonds in either of the two prior GHS-denominated invitations to exchange by the Government in 2023 (i.e., the February 2023 Exchange or in August 2023 with respect to Pension Funds (the “Pension Fund Alternative Offer”, and together with the February 2023 Exchange, the “Prior Domestic Cedi Exchanges”)) you are not eligible to tender in this Invitation and are no longer an Eligible Holder. The purpose of this Invitation is to provide those holders who did not participate in either of the Prior Domestic Cedi Exchanges with the opportunity to exchange their Eligible Bonds for New Tranches.
- As mentioned above, except for dates specific to this reopening exercise and the payment of interest that has accrued since the February 2023 Exchange, the terms of this Invitation are identical to the terms of the February 2023 Exchange. Notwithstanding this, for convenience, we are restating the main terms of the Invitation in the following paragraphs:
- Upon tendering Eligible Bonds, the exchange consideration Eligible Holders will receive (including which New Tranches and their allocation per amount of principal amount tendered) will depend upon the category applicable to such Eligible Holder (each such category a “Holder Category”). “Category A Holders” consist of Eligible Holders that are Collective Investment Schemes (as defined below) or natural persons below the age of 59 years old as of 1st January 2023. “Category B Holders” consist of Eligible Holders that are natural persons 59 years old or older as of 1st January 2023. “General Category Holders” consist of Eligible Holders that are not Category A Holders or Category B Holders, which may include corporate entities and financial institutions not contained within the definition of Collective Investment Schemes, but may not include Pension Funds. For purposes of the Invitation, (i) a “natural person” is a natural person who, in respect of the Eligible Bonds being tendered by such person, is registered as such (or with an equivalent term) in the records of the CSD (as defined below), (ii) “Pension Fund” means the pension contributions and investment funds of a mandatory and/or voluntary contributory pension scheme duly recognised and validly operating under the National Pensions Act, 2008 (Act 766) as amended, and (iii) “Collective Investment Scheme” means a mutual fund, unit trust scheme or any other entity validly licensed by the Ghana Securities and Exchange Commission (SEC) to operate as a collective investment scheme.
- The Government is offering Eligible Holders accrued and unpaid interest (“Accrued Interest Payable”) on their Eligible Bonds validly tendered and accepted by the Government, calculated from and including the last interest payment date up to, but excluding, 21st February 2023 (the “Original Settlement Date”), which amount will be paid to such Eligible Holders in the form of capitalized interest (rounded down to the nearest GHS1.00) added to the principal amount of the New Tranches and distributed across the New Tranches in the same proportion as the Exchange Consideration Ratios (as defined below).
- Eligible Holders whose validly submitted Offers are accepted by the Government will receive on the Reopening Settlement Date (as defined below) principal amounts of New Tranches which will be allocated depending on such Eligible Holder’s Holder Category when they tender, calculated with the consideration ratios described in the applicable table in Appendix C attached hereto (the “Exchange Consideration Ratios”) per principal amount of Eligible Bonds tendered (including the Accrued Interest Payable in respect thereof), which Exchange Consideration Ratios are, for the avoidance of doubt, the same Exchange Consideration Ratios as in the February 2023 Exchange.
- Category B Holders whose validly submitted offers or exchange instructions are accepted by the Government will receive a New Tranche of each of the Republic of Ghana’s Domestic Exchange Series 2023-B-1 Bonds due 2027 and Domestic Exchange Series 2023-B-2 Bonds due 2028 (such New Tranches, the “Category B New Tranches”), allocated using the Exchange Consideration Ratios.
- General Category Holders whose validly submitted offers or exchange instructions are accepted by the Government will receive New Tranches of the Republic of Ghana’s Domestic Exchange Series 2023-GC-1 through 2023-GC-12 (such New Tranches, the “General Category New Tranches”) depending on whether the tendered Eligible Bonds are or were due 2023 (the “Eligible 2023 Bonds”) or later than 2023 (the “Eligible Post-2023 Bonds”), in each case allocated using the Exchange Consideration Ratios.
- As described in more detail in the tables in Appendix B attached hereto (Financial Terms of the New Tranches), interest on the New Tranches will be paid in cash (“Cash Interest”), except that with respect to the General Category New Tranches only, and only during the period from and including 21st February 2023 to but excluding 18th February 2025, the Government will pay a specified portion of the interest (the “PIK Interest”) by instead increasing the principal amount of such General Category New Tranches. When the Government pays any PIK Interest, it will increase the principal amount of the applicable General Category New Tranches in an amount equal to the amount of PIK Interest for the applicable interest payment period (rounded down to the nearest GHS 1.00) to holders of such General Category New Tranches on the relevant record date.
- Eligible Holders holding Eligible Bonds maturing on or prior to the Reopening Settlement Date (including, without limitation, any extension of the Reopening Settlement Date) (each such Eligible Bonds, a “Maturing Eligible Bond”) will not receive a final interest payment (except for Accrued Interest Payable for tendering holders as described herein) or a final principal payment (regardless of whether an Eligible Holder has tendered or not) on such Maturing Eligible Bonds. Offers or exchange instructions in respect of Maturing Eligible Bonds made after their maturity date but prior to the Reopening Settlement Date will be, and those made prior to such maturity date will remain, valid, and the Government will treat Maturing Eligible Bonds in respect of such offers or exchange instructions as still outstanding for purposes of the Invitation.
- The Government reserves the right in its sole discretion to accept any and all offers with respect to any series of Eligible Bonds.
- Offers may only be submitted starting today (the “Launch Date”) and ending at 4:00 p.m. (Greenwich Mean Time (GMT)) on 22nd September 2023 (the “Expiration Date”). However, the Government may at its sole discretion extend the Expiration Date (including for one or more series of Eligible Bonds). Offers may not be revoked or withdrawn at any time except in the limited circumstances described in the Exchange Memorandum.
- On 29th September 2023 (the “Reopening Settlement Date”) the Government will issue the New Tranches to Eligible Holders whose offers are accepted for credit to the account of such Eligible Holder at the CSD. The Government reserves the right to extend the Reopening Settlement Date (including with respect to one or more series of Eligible Bonds) without offering Eligible Holders the right to withdraw their offers.
- Morrow Sodali Limited is acting as the information and coordination agent (the “Information and Coordination Agent”). Lazard Frères is acting as financial advisor to the Government in connection with the Invitation (the “Financial Advisors”).
- Any questions or requests for assistance regarding the Invitation may be directed to CSD and/or the Information and Coordination Agent at the contact information set forth below.
- Eligible Holders, or custodians for such holders of Eligible Bonds, may obtain a copy of the Exchange Memorandum by accessing the Invitation Website (https://projects.morrowsodali.com/ghanadde).
Summary of the Exchange Procedures for Eligible Holders
- The exchange procedures are the same as for the February 2023 Exchange. Notwithstanding this, for convenience, we are restating the main procedures in the following paragraphs:
- Eligible Holders interested in participating in the Invitation are invited to send an offer or exchange instruction to their respective CSD direct participant (the “Depository Participant”), in the form and via the channels agreed and customary between them.
- As of the Launch Date and until the Expiration Date of the Invitation, Eligible Holders having active securities accounts balances and interested in participating in the Invitation will have the opportunity to send an offer or exchange Instruction to their respective Depository Participant.
- Eligible Holders may download an exchange form from the website of the Central Securities Depositary (GH) Limited (“CSD”) (www.csd.com.gh/dde), complete and send the duly completed exchange form to their Depository Participant via email or via any internal communication platform they use (if any), or send an instruction in the format, or via any other standard means of communication available and accepted by the such Depository Participant.
- By submitting an offer or exchange instruction, Eligible Holders consent to the blocking by the CSD of any attempt to transfer such Eligible Holders’ Eligible Bonds prior to the Settlement Date or the termination of the Invitation to Exchange.
- For more details on these procedures, please refer to the Exchange Memorandum or contact the CSD at the contact information below. END