Ghana’s missed coupon payments on its foreign denominated bonds have been ruled to count as a failure-to-pay event by a panel of investors and banks. This ruling paves the way for a payout of the default-insurance contracts that are tied to the country’s debt and opens the door for Ghana to receive the funds.
According to an announcement that was posted on the committee’s website on Friday, the decision was made at a meeting of the Credit Derivatives Determinations Committee (CDDC) that was held on Monday. On January 18, Ghana did to make its interest payment on a $1 billion eurobond that was due to mature in 2026. A grace period of thirty days was granted as a result of the delayed payment, but it ran out on February 17, at the end of the business day.
The court’s decision will result in the insurance company protecting Ghana’s sovereign debt having to make a payout. According to statistics provided by the Depository Trust & Clearing Corp. as of the 10th of February, credit-default swaps covered a gross amount of $66.4 million and a net amount of $34.4 million of Ghana’s debt.
Following the judgment, there was no change in the price of the country’s eurobonds; the majority of the notes continue to trade at a discount of 60–65% compared to their face value, according to the CBBT pricing that was collated by Bloomberg.
In January, the swaps panel reached the conclusion that Ghana’s decision to temporarily halt debt servicing on its eurobonds, commercial term loans, and the majority of its bilateral debt qualified as a “possible repudation/moratorium.” This occurred before the grace period for the first missing payment had run its course and been exhausted.
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Ghana Didn’t Pay Its Interest On Time, Which Made The Default Coverage Pay OutSince November, Ghana has been in discussion with potential investors over the restructuring of approximately $30 billion of its total $46 billion in local and international debt. It just finished the first part of a domestic restructuring, which involved investors trading 83 billion cedis ($6.5 billion) or 64% of holdings for new assets.
This was done in contrast to the total goal of exchanging 80% of holdings for new investments. According to comments made by Minister of Finance Ken Ofori-Atta on February 16th, the organization plans to initiate “substantive” conversations with international bondholders and their advisors in the coming weeks.
According to a report that was published by Bloomberg News earlier this week, the African nation has also started talking with China about renegotiating the terms of their bilateral loans.
(The pricing of bonds has been added to the fourth graph, and background information has been added to the fifth and seventh graphs.)
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