Government has began processes aimed at restructuring Ghana’s public debt stock, the Vice President, Dr. Mahamadu Bawumia has said. Debt re-profiling is a form of financial restructuring where more expensive debts are replaced with less expensive ones.
In some cases,short-term debts are replaced with long-term ones, ostensibly to reduce the debt stock. As part of measures to ensure that government successfully implements its debt re-profiling plan, the Vice President revealed that, Ghana issued a total of 2.25 billion dollars in four bonds.
“Last Friday, Ghana issued a bond essentially to do this re-profiling and in that context we raised some 2.25 billion dollars of investment that came in to buy this cedi denominated bond. There was a cedi bond which was issued for 15 years tenure and that brought in 2.25 billion.”
“What is so remarkable about this transaction is that, we have been able to re-profile our debt, get more foreign exchange without increasing our debt stock and that is so remarkable.”
Speaking at Joy FM’s town hall meeting , the Vice President also sought to dismiss claims that government was rather increasing the debt stock through these bonds, saying “Many people did not quite understand the transaction and they thought that we had gone to borrow 2 billion dollars to add to Ghana’s debt.
No, we are actually replacing more expensive debts with less expensive ones.” Gov’t raises 2.25 billion in four bonds A few weeks ago, government issued a total of 2.25 billion dollars in four bonds.
The first two bonds, totaling 1.13 billion dollars, was issued at 15 and 7 years period with the same coupon of 19.75%. In addition, the Ministry of Finance raised the cedi equivalent of USD1.12 billion in 5 and 10 year bonds via a tap-in arrangement.
This issuance represents the largest amount issued by a sub-Saharan African country in a day. The issuance attracted a number of global portfolio investors including a very substantial investment in the 15-year bond by a very well respected global financial investor.