Williams Peprah: Financial instruments without risk are in heaven

Peprah was speaking in reference to the call by individual bond holders to be exempted from the government's domestic debt exchange programme

Williams Kwasi Peprah, the finance expert and associate professor with Andrews University in Michigan, has said the law is clear when it comes to possible risk involved on all types of investments.

“The only asset or instrument that runs without a risk can probably only be found in heaven, certainly not on this earth. There is risk in all investments,” Peprah said on the Asaase Breakfast Show on Friday (13 January).

Peprah was speaking in reference to the call by individual bond holders to be exempted from the government’s domestic debt exchange programme.

“I understand the sentiments because some people are at retirement age and their monies are vested there,” Peprah said. “But the reality and the laws are clear … bonds, assets or instruments have risk.”

“There must be the education that as the returns entice you to buy into a bond, there is a risk attached to it,” the expert told sit-in host Benjamin Offei-Addo. “It is not straightforward, and it is only through these probable risks that your returns increase.”

Government includes individual bondholders in debt exchange programme

The government last month modified its GHC137.3 billion domestic bond exchange programme to include individuals, as part of efforts to restructure its debt.

This is to secure an approval from the management and executive board of the International Monetary Fund (IMF) for a US$3 billion loan-support programme, to address Ghana’s current economic crisis.

A release issued by the Finance Ministry noted that in addition to foregoing extensions the government was “expanding the type of investors that can participate in the exchange to now include individual investors.”

Other modifications to the debt exchange programme included the setting of a non-binding target minimum level of overall participation of 80% of aggregate principal amount outstanding of eligible bonds.

The release also said that: “Offering accrued and unpaid interest on Eligible Bonds, and a cash tender fee payment to holders of Eligible Bonds maturing in 2023.”

There would also be eight new instruments to the composition of the new bonds, for a total of 12 new bonds, one maturing each year starting January 2027 and ending January 2038.

However, the Ministry said the modifications would be set forth fully in an Amended and Restated Exchange Memorandum, expected to be published in the week of 26 December 2022.

“Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the Amended and Restated Exchange Memorandum.” The Ministry added in the release.

The government has further extended the deadline for the voluntary participation in the debt exchange programme to 16 January 2023 from the previous 30 December.


Fred Dzakpata


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