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.
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.
Morgan Stanley Ulifts Ghana Eurobond ‘recovery’ value to $46 from $41
