Price of Ghana’s Eurobonds drop by $1.60; yields rise by 120bps over external debt payment suspension
Price of Ghana’s Eurobonds dropped on Monday afternoon following the announcement of the suspension of payments of the country’s external debts by the Finance Chief, Ken Ofori-Atta.
Ghana’s 2032 bond fell by $1.60 in price reaching $32 indicating investors willingness to take a hit and exit the country’s bond market.
On the back of the fall in price of the 2032 bond, yields of the 2032 bond rose by 120bps (1.2%) to hit 29%.
The 2032 bond issued on March 26, 2019 which matures on March 26, 2032 offers coupon rates of 8.12%.
Total volume of the issued 2032 bond amounts to $1.25bn.
Finance Chief Ken Ofori-Atta, on Monday, December 19, announced the suspension of payment on selected external debts including payment on Ghana’s Eurobonds, commercial term loans, and bilateral debt.
The decision by the Finance Ministry to suspend payments of the country’s external debts, it noted in a statement issued on Monday, December 19, 2022, forms part of “additional emergency measures necessary to prevent a further deterioration in the economic, financial, and social situation in Ghana.”
“This suspension will include the payments on: our Eurobonds; our commercial term loans; and on most of our bilateral debt. This suspension will not include the payments of our multilateral debt, new debts (whether multilateral or otherwise) contracted after 19 December 2022 or debts related to certain short term trade facilities.
“We are also evaluating certain specific debts related to projects with the highest socio-economic impact for Ghana which may have to be excluded. This suspension is an interim emergency measure pending future agreements with all relevant creditors,” read parts of the statement.
“As it stands, our financial resources, including the Bank of Ghana’s international reserves, are limited and need to be preserved at this critical juncture,” it added.
