Ghana has made “significant progress” in debt-restructuring negotiations and the latest snag that sent its eurobonds tumbling on Monday will be ironed out in further talks with bondholders, Finance Minister Mohammed Amin Adam said.
Negotiations that started mid-March resulted in an interim deal last week with international investors holding about 40% of Ghana’s $13 billion of defaulted eurobonds. Still, Adam conceded in an interview that agreement breaches the International Monetary Fund’s debt sustainability parameters “slightly.”
“This is not a failure but an ongoing process to arrive at an agreement consistent with debt thresholds” under the IMF’s debt sustainability analysis, or DSA, Adam said. The government will “regroup with our bondholders to continue to tweak the terms until we have final terms that work for all parties,” he said.
Ghana’s eurobonds plunged by the most since Dec. 2022, with notes due in June 2035 falling as much as 3 cents to 47.55 cents on the dollar before paring the decline.
The IMF said in a statement that the “working scenario” presented by the government of Ghana “is not in line with program parameters.”
“The IMF will continue to support the ongoing restructuring negotiations between the authorities and their external commercial creditors with the view to reach an agreement that is consistent with program parameters,” the lender said.
The latest development brought more clarity on the broad outline of the eurobond restructuring, though the terms of an agreement would have to be “fine-tuned” to meet the IMF thresholds, said Samir Gadio, head of Africa strategy at Standard Chartered Plc. Bond prices are now not far from recovery levels implied by the restructuring proposal, he said.
International bondholders had agreed to a 33% effective nominal haircut, according to one of two options provided for the restructuring.