Debt exchange programme: Market reacting positively, says analyst

The market reacted positively to Ghana’s debt exchange programme announced on Monday by the Finance Minister, according to financial system analyst Kojo Letsa.

Finance Minister Ken Ofori-Atta launched the debt exchange programme in line with the government’s quest to restructure debt and put the economy back on track.

Appearing on The Asaase Breakfast Show on Thursday (8 December), Letsa said the announcement has given a major boost to investor confidence in Ghana’s economy.

“So, the truth of the matter is that offshore investors knew this was coming,” Letsa said. “They all knew with our debt stock, the only feasible thing is to approach the International Monetary Fund (IMF) and get some deal on the table.”

“We noticed that the Eurobond, the one that was guaranteed by the World Bank gained some points…, so it is something that investors were expecting

“Now that it is out there, it sort of gives them some confidence that the government is doing something to prove to the IMF that we are doing something to secure our macros,” Letsa added.

Listen to Kojo Letsa in the attached audio clip below: 

Some details

Ofori-Atta has announced that the government is working hard to “minimise the impact of domestic debt exchange on investors holding government bonds.”

In a statement issued ahead of the launch of the programme, Ofori-Atta gave assurance to “small investors, individuals and other vulnerable groups” that their investments are safe as the government plans to announce full details about Ghana’s domestic debt exchange on Monday (5 December).

He said the aim of the domestic debt exchange is to help restore macroeconomic stability.

“We are confident that these measures will contribute to restoring macroeconomic stability,” Ofori-Atta said.

“Treasury bills are completely exempted and all holders will be paid the full value of their investments on maturity.”

“There will be no haircut on the principal of bonds. Individual holders of bonds will not be affected,” he added.