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A retired Ghanaian pilot who is an individual bondholder has pleaded with the government to exempt, as a matter of importance, all individual bondholders from the Domestic Debt Exchange Programme (DDEP).

Speaking to Asaaseradio.com on condition of anonymity, the retired pilot said the domestic debt exchange programme announced by the Ministry of Finance will rob individual bondholders of their livelihood, especially pensioners like him who hold individual bonds.

 “This unilateral inclusion of domestic bondholders is in breach of the Tenth Commandment, which states that you shall not covet your neighbour’s house nor anything that is for your neighbour.

“Domestic bonds are being included because the government is coveting our monies, just because they see it,” the retired pilot said.

Choosing bonds over T-bills
The retired pilot noted that the reason why most people in his circle opt for bonds is that “when you decide to keep your money in an account it will finish quickly. You can decide to buy either Treasury bills (T-bills) or bonds with it [instead].

“When you go to the bank, the bank will convince you to buy bonds rather, and the reason they give you is that bonds yield more profit than T-bills.

“So, more often than not, you decide that keeping your monies longer in bonds will rather benefit you. So you agree and buy the bonds instead of T-bills,” he said.

“Now the government has messed us up. Even those whose bonds will mature this year can’t get their monies, but the government is still issuing T-bills and paying higher interests. Bond rates are max 20%: T-bills now are over 30%,” the pilot added.

Protecting bondholders

In a related development, the New Patriotic Party strategist and senior partner at Africa Legal Associates (ALA), Gabby Asare Otchere-Darko, has posted a series of tweets commending those leading the conversation and consultations with the Finance Ministry with the aim of getting the government to exempt individual bondholders from the debt exchange programme.

“Those mobilising to lead the voices of individual bondholders deserve our utmost commendation for speaking up for a big number of people who otherwise would have had no organised voice like institutional investors. But let’s be careful about the dangers of a no-compromise stance,” one of Gabby’s tweets said.

“At least, let’s see, possibly, all pensioners, not just institutional investors, individual pensioners who are bondholders, fully isolated from this exchange programme.

“I said earlier, whatever can be done to ease the burden on individual bondholders in this exchange programme must be done,” said Otchere-Darko in a second tweet.

DDEP modifications

On Saturday 21 December 2022, the government modified its GHC137.3 billion domestic bond exchange programme to include individuals. The debt exchange programme is among efforts the government is making to restructure the national debt.

The government took the decision to restructure domestic debt as a step towards securing approval from the management and executive board of the International Monetary Fund (IMF) for a US$3 billion loan-support programme that will help stem Ghana’s economic crisis.

A press release issued by the Ministry of Finance said that, in addition to extensions previously set out, the government was “expanding the type of investors that can participate in the exchange to now include individual investors”.

Other modifications to the debt exchange programme include the setting of a non-binding target minimum level of overall participation of 80% of aggregate principal amount outstanding of eligible bonds.

The ministry also said it is “offering accrued and unpaid interest on eligible bonds, and a cash tender fee payment to holders of eligible bonds maturing in 2023”.

There would also be eight new instruments to the composition of the new bonds, making a total of 12 new bonds, one maturing each year starting January 2027 and ending January 2038.

The ministry said the modifications would be set out in full detail in an amended and restated exchange memorandum, expected to be published in the week of 26 December 2022.

“Conforming changes (including adding and modifying defined terms) in respect of the above amendments and modifications to cure ambiguity, omission, defect, error or inconsistency may be included in the Amended and Restated Exchange Memorandum.” the ministry said.

The government has further extended the deadline for voluntary participation in the debt exchange programme, first from 19 December to 30 December 2022, then to 16 January and now to 31 January 2023.