Ghana is aiming for a simple debt restructuring to exchange old bonds for new notes, according to five sources with direct knowledge, as the country seeks relief on some $13 billion owed to international private creditors.
Finance ministry representatives and advisers met investors in London last week, sharing their intention to exclude any so-called state-contingent debt instruments - debt that links payouts to variables such as economic performance or commodity prices, the sources said, asking not to be named because the talks are private.
Some bondholders increasingly favour the use of such instruments as a way of bridging differences in their outlook on a country's economic trajectory. Debt restructuring talks in Zambia and Sri Lanka feature a plan to include such tools.
Some of the investment funds are involved across all these debt negotiations.
Government officials in the gold and cocoa producer met members of the steering committee, which holds a majority of the bonds, as well as their advisers. They also met other investors who hold Ghana's notes outside of this group, the sources said.
Bondholders are split on the proposal, with certain investors still seeking some type of value-recovery instrument, one of the sources said.
Another source said that the government, while preferring a clean and easy structure, might be receptive to including an instrument that pays out extra to bondholders - a so-called step up - following a restructuring based on a conservative overall scenario.
However, Ghana was wary of a debt rework including a step-down, where bond holders receive less if the macro outcome is not as good as expected.
NEW PROPOSAL
Ghana earlier this month secured a further $600 million from the International Monetary Fund under its bailout programme after reaching a deal to restructure $5.4 billion of loans with its official creditors.
Spiralling debt servicing costs had prompted the nation to embark on a restructuring a year ago.
The West African country's advisers sent a debt restructuring proposal on Friday to its counterparts, three sources said, with one adding that the plan included a principal haircut of more than 30%, though no further details were available.
Lazard and Hogan Lovells are the government's financial and legal advisers, while the creditors are working with Rothschild & Co and Orrick, Herrington & Sutcliffe LLP as advisers.
A spokesperson for the finance ministry did not immediately respond to a request for comment. A spokesperson for Lazard declined to comment.
For now, bondholders are not restricted from trading the country's notes, the sources said, adding that direct conversations could start soon.
The government told investors that they would like to reach a deal by end-February, after the agreement on official debt reached with creditors such as the Paris Club and China.
