As Ghana restructures its debt in order to be eligible for a loan from the International Monetary Fund, it is requesting that local bondholders endure interest payment losses.

According to West African nation's finance minister Ken Ofori-Atta, four new bonds with maturities of 2027, 2029, 2032, and 2037 will replace the nation's current local currency debt.

In the video that was broadcast late Sunday on the Ministry of Information's page, he stated that the yearly coupon on all of the new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.

Semi-annual coupon payments will be made.

“There will be no haircut on the principals of bonds,” he said on the local-debt restructuring. “External debt restructuring parameters will be presented in due course,” Ofori-Atta said.

Ghana is negotiating a $3 billion program with the IMF after being shut out of international debt markets amid a selloff of its dollar bonds that lifted yields to distressed levels. The cedi is the world’s worst-performing currency against the dollar this year, raising the cost of servicing loans.

While the world’s second-biggest cocoa producer has no dollar debt maturing until July 2023, it faces 43.5 billion cedis ($3.1 billion) in domestically-sold local-currency bonds maturing through the end of June, according to data compiled by Bloomberg. On top of that, it has $663 million coupon payments on dollar debt.

Ghanaian lenders will be the most impacted by the government’s move, as they held 32% of outstanding government bonds at the end of August, the biggest chunk among investor groups, according to data from the Central Securities Depository Ghana Ltd.

The Bank of Ghana and other financial regulators will ensure that impact is “minimized,” Ofori-Atta said. He said that the government is also putting together a financial stability fund with development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes.

Treasury bills will be excluded from the local-debt restructuring to protect small investors and individuals, according to Ofori-Atta.

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