Dr Cassiel Ato Forson
Some Eurobond investors impacted by the Domestic Debt Exchange Programme (DDEP) have taken steps to initiate legal action against some commercial banks in the country over the role they played in restructuring their bonds.
According to our sources lawyers representing some of the investors have officially written to the banks, to inform them of their intention to sue for losses incurred as a result of the restructuring and the subsequent hair cut on their investments.
The investors argued that they decided to invest based on the trust they had in the commercial banks. Some of the bondholders initiating the action did not sign up to participate in the Domestic Debt Exchange Programme.
Confirming the story on Joynews, Chief Executive of Ghana Association of Banks, John Awuah acknowledged the situation but described the action as surprising.
“We are indeed aware of the threat to sue, while some have also initiated the process of taking legal action against some of our members (banks)”
Mr Awuah however explained that the banks only acted as agents for the government for distribution purposes, of the Eurobond issuance and therefore finds the action very interesting.
“The bonds came with a clear prospectus which included collective action clauses”, he said.
He noted that the current regulations that cover the investments clearly state that the commercial banks cannot be held liable, when the principle (Government) fails to deliver or there is challenge.
Background
The government in September 2024 launched the Debt Exchange Programme for Eurobond holders to restrict papers worth 13 billion dollars by inviting bond holders to swap their old bonds for new ones.
The offer, which begun on September 5, 2024 saw bondholders having up until September 30, 2024 to fully accept the offer from government.
The investors, who subscribed before, September 20, 2024, will be eligible for a 1 per cent consent fee.
“The Eurobond exchange was designed with fairness in mind, reflecting agreements made with bondholder representatives on June 24, 2024.
The process involved two main investor options: the PAR Option, which had no nominal haircut but a lower interest rate of 1.5%, and the DISCO Option, which carried a 37% nominal haircut but offered higher interest rates between 5% and 6%”.
According to the government, Ghana was able to save about 5 billion dollars and 4.3 billion dollars in debt service.
A Business Desk Report