DDEP to wipe away GHS 15.5bn of bondholders’ life investments
An estimated GHS 15.5bn is said to be wiped off the value of investments held by some 1.3 million individual bondholders.
In a petition addressed to the President by the Ghana Individual Bondholders Forum, the debt exchange programme will impoverish individual bondholders as individual bondholders stand to lose about 88.2% of their investments at the current inflation rate.
“our coupons face absolute haircuts and when we discount your proposed benchmark bonds at the coupon rates of the original bonds, we are losing effectively 50% of our investments. When discounted at current T-bill rates, we are losing 71% of our investments, and at prevailing inflation, we face an 88.2% loss. Respectfully, the President’s promise of no loss or haircut has not in any form been honoured,” stated the Forum.
According to the IBF, bond holdings by individual investors through collective investment schemes represent about 11% of eligible bonds, extremely less the 80% target of eligible bonds by the government.
“Individual Bondholders are not a critical success factor to the viability of the DDE programme as you envisage, yet the impact of their inclusion has incalculable consequences. Please exclude us and save 1.3mn livelihoods and dependents from shackled penury”, it added.
“Sir, let it not be said ever that during your tenure, your policies impoverished citizens whose primary duty to country was service and love through hard work and taxes. Your DDE as proposed for Individual Bondholders takes away our liberty to self-sustain, mocks hard work, and robs us of legally acquired property,” it further stated.
DDEP to affect 1.3m individual bondholders and their dependents
Some 1.3 million individual bondholders along with their dependents will be affected by the domestic debt exchange programme, states the Ghana Individual Bondholders Forum.
According to the Forum, the DDEP in its current form will impoverish individual bondholders who are largely pensioners and whose sustenance and honour of responsibility of taking care of their families is dependent on returns and cashflow from government securities.
The IBF argues that, unlike other investor category which are likely to benefit from the Financial Stability Fund, individual bondholders have no support to fall back on.
Adding that, the DDEP is harshest on individual bondholders than any other investor category.
“The social impact of the DDE as currently presented for individuals is the harshest on any investor category and catastrophic to the livelihoods of the about 1.3mn direct and indirect bondholders and their dependents. Unlike other investor categories likely to benefit from the Financial Stability Fund, Individual Bondholders have no support to fall back on.
“We trusted the Bank of Ghana’s zero risk rating on government bonds. We chose to invest our strained earnings in Government bonds on the back of this trust to provide security of income required to meet pertinent needs like medication, children’s education and the general welfare of our families. The decision to include Individual Bondholders in the DDE evokes painful memories of loss many of our members suffered in the infamous banking sector clean up. It will be a sad case of double jeopardy for Government to superintend a process where ordinary Ghanaians will have to suffer yet again after the recent banking crisis.
“Our members include pensioners whose sustenance, health, dignity of independence and honour of responsibility in taking care of their young wards and families depend on their returns and cashflow from these government securities. The structure of the DDE is at variance with the programmed needs of individuals, and therefore, resulting in pains and punishment. How do you expect them to self-sustain?,” quizzed the IBF in a petition addressed to the President.
