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Bondholders to lose 88.2% of investments at current inflation rate – Ghana Individual Bondholders Forum

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The Ghana Individual Bondholders Forum has hinted that bondholders will lose about 88.2% of their investments at the current inflation rate if the government goes ahead and include individuals in the Domestic Debt Exchange programme.

According to the Forum, the bondholders will however lose 71% of their investments when discounted at current Treasury bill rates and 50% when the coupon rates face ‘haircut’.

In a statement, it said, President Akufo-Addo’s promise of no loss or haircut has not in any form been honoured, adding “great will be lost, too much is missing, everything is broken, you will not recover, your livelihoods shall be destroyed”.

It mentioned that the President was explicit that there will be no haircuts in his public address on the December 5, 2022, quoting 1 Samuel 30:19 saying “nothing was missing, small or great. I say to you, nothing will be lost, nothing will be missing, and nothing will be broken. We will, together, recover all.”

But the Forum added “this was the case for us before your information memorandum on the December 24, 2022. But today, our coupons face absolute haircuts and when we discount your proposed benchmark bonds at the coupon rates of the original bonds, we are losing effectively 50% of our investments. When discounted at current T-bill rates, we are losing 71% of our investments, and at prevailing inflation, we face an 88.2% loss”.

The Forum continued that direct individual bondholding and holdings through collective investment schemes stand at about ¢15.5 billion, representing about 11% of the eligible bonds and the capitalized interest.

“With your set target of 80% of eligible bonds, Individual Bondholders are not a critical success factor to the viability of the DDE programme as you envisage, yet the impact of their inclusion has incalculable consequences. Please exclude us and save 1.3 million livelihoods and dependents from shackled penury”, it added.

The Forum described President Akufo-Addo’s tenure as one having policies impoverishing citizens whose primary duty to the country was to service and love through hard work and taxes.

“Your DDE as proposed for Individual Bondholders takes away our liberty to self-sustain, mocks hard work, and robs us of legally acquired property. None of these reflect the tenets of good governance”, it further stated.

It however stated the group have persons who possess technical and policy skills and are willing to assist government explore viable options without catastrophically impairing the interests of Individual Bondholders.

The Individual Bondholders’ Forum is a representative body for individual investors such as the Government of Ghana’s Local Cedi Bonds, the Government of Ghana’s Local USD Bonds, the ESLA PLC Bonds, Daakye Bonds, Ghana Eurobonds and Collective investment schemes with investments in the above securities.

The direct individual bondholding and holdings through collective investment schemes stand at about ¢15.5bn, representing about 11% of the eligible bonds and the capitalized interest.

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