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Ghana says it expects to reach an agreement on debt restructure with eurobond holders by the end of the year, in what would be a boost for Nigerian banks which could book write-backs, after reporting heavy losses from haircuts on their eurobond portfolios.
“We would want to conclude with the eurobond debt holders by year-end,” Minister of Finance Ken Ofori-Atta said in an interview.
“We’re really pushing to see whether we can conclude with the bilaterals and sign the memorandum of understanding by the end of this month,” he said, referring to official government creditors.
Ghana suspended interest payments on most of its external debts in December, catching bondholders by surprise and effectively defaulting as the country struggles with the worst economic crisis in a generation.
Guaranty Trust Holding Company Plc (GTCO), Nigeria’s second largest banking group by market capitalisation, booked net impairment charge on other financial assets of N81.3 billion in the first six months of 2023, largely on the back of the default by the Ghanaian government on its Eurobonds.
““We look at our Eurobond exposure in Ghana we have already taken 30% haircut,” the Group Chief Executive Officer of GTCO Plc, Segun Agbaje, said in a conference call earlier this month, listened to by MoneyCentral.
The provisioning’s are available for write-backs, depending on the terms and conditions of the restructuring, according to Agbaje.
Access Holdings a tier-one Nigerian lender took an impairment charge of N103.10 billion in Full Year 2022, in recognition of the economic loss impact of Ghana sovereign debt crisis (Domestic debt and Eurobonds).
Fitch Ratings on Tuesday said an agreement with official creditors might only be reached by the end of the year, meaning a eurobond revamp accord may only come through by mid-2024.
The country’s dollar bonds maturing in 2032 rose a sixth day, by 0.41 cents to 45.65 cents on the dollar. Notes maturing in 2051 gained 0.28 cents to 44.20 cents on the dollar.
On December 5, 2022, the Government of Ghana launched the first Ghana’s Domestic Debt Exchange programme (DDEP), in response to the Government defaulting in servicing its debts valued at $50 billion, when it suspended payments on most of its external debts including Eurobonds, to ensure debt sustainability aimed at securing a $3 billion IMF economic support.
The country, which has reworked about $11.7 billion of domestic debt, or 85% of the target, reopened a domestic debt exchange on Thursday for those who didn’t participate previously to voluntarily swap their holdings for new securities.
“Participation in this administrative reopening would also further improve the cashflow position of the government and further support debt sustainability,” the Finance Ministry said.