JOHANNESBURG: Investment bank Morgan Stanley has lifted the average “recovery value” for Ghana’s defaulted dollar-denominated government bonds to $46 from a previous forecast of $41 following the country’s deal to restructure its local currency debt.
The government, which is battling a once-in-a-generation economic crisis, said this week it had finished a domestic debt exchange with 85% participation of “eligible” bonds - or 64% of the 130 billion cedis ($10.8 billion) originally slated for restructuring, before pension funds were excluded when unions threatened to strike.
Morgan Stanley revised down its “exit yield” forecast for Ghana’s foreign currency bonds to 13-14% from around 15% and estimated the domestic debt exchange would save the government about $7.8 billion from 2023 to 2028, versus a previous prediction of $7 billion.
“We retain our like stance on hard currency bonds,” the bank said in a research note published late on Thursday.
It estimated that the so-called net present value (NPV) loss for domestic bonds would be 51%, compared with an average of 21% in other local debt restructurings over the last 15 years in countries like Jamaica, Nicaragua and Cyprus.
Ghana’s finance minister, Ken Ofori-Atta, told parliament on Thursday that substantive discussions were due to be held in the next few weeks with international bondholders.
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Ghana has about $13 billion in dollar-denominated international bonds or “Eurobonds” as they are also known.
Most were trading at between 37 cents and 41 cents on the dollar on Friday.
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