Finance Ministry commences coupon payments on old bonds
Ghana’s Ministry of Finance has announced that it has commenced coupon and principal payments on old bonds that matured on 6th and 13th February 2023. The move follows a press release issued on 27th February 2023, in which the Ministry of Finance promised to settle outstanding bond payments. Holders of the bonds that matured on the aforementioned dates should expect to receive their payments within the next 48 hours.
However, this announcement comes amidst accusations by the Coalition of Individual Bondholder Groups that the Ministry of Finance has failed to honour its promises to pay coupons and principals on old bonds. The coalition is made up of the Ghana Bondholders’ Forum and the Individual Bondholders’ Association of Ghana. Despite multiple assurances, including a written press release confirming the resumption of payments on March 13, 2023, the Ministry of Finance has been accused of flouting established regulations meant to safeguard market integrity and the nation’s sovereign credibility.
The Coalition has accused the Ministry of Finance of continuing to disregard the basic rules that have been established to protect the integrity of the local markets and maintain sovereign credibility for Ghana. They lament that the situation has left individual bondholders in a precarious position. The coalition also stated the need for better communication from the ministry.
Dr. Joel Djangma Akwetey and Senyo K. Hosi, the conveners of the respective groups, issued a strongly-worded statement, calling for a 48-hour ultimatum to the Ministry of Finance and related stakeholders to address their concerns. The coalition warned that failure to honour its word to pay all matured principals and outstanding coupons due on the existing bonds issued by the Government of Ghana would result in further actions.
The accusation by the Coalition of Individual Bondholder Groups raises questions about the government’s handling of the Domestic Debt Exchange Programme (DDEP). The DDEP was introduced in 2021 to restructure the country’s domestic debt by offering bondholders the opportunity to exchange their existing bonds for new bonds with longer maturities. Bondholders who did not participate in the DDEP are now raising concerns about the government’s commitment to honour their obligations.
The situation underscores the importance of transparency and clear communication in the bond market. Investors need to know that they can trust the government to honour its obligations. The government, on its part, needs to ensure that it adheres to established regulations and communicates effectively with bondholders. The government’s failure to do so could erode investor confidence and harm the country’s creditworthiness.
The government’s announcement that it has commenced coupon and principal payments on old bonds that matured on 6th and 13th February 2023 is a step in the right direction. However, the accusations by the Coalition of Individual Bondholder Groups highlight the need for better communication and transparency in the bond market. The government must work to restore investor confidence by honouring its obligations and adhering to established regulations.
