Gov’t’s credibility in doubt as bondholders give ultimatum for coupon payment

The Government of Ghana is facing mounting pressure from individual bondholders who have been left in the lurch as the Ministry of Finance fails to fulfill its obligation to pay coupon and principal payments due to bondholders who opted out of the Voluntary Domestic Debt Exchange program.

In a press release dated February 14, 2023, the Ministry of Finance reassured individual bondholders that their coupon payments and maturing principals, like all Government bonds, would be honored in line with Government fiscal commitments. However, a subsequent press release from the Ministry on February 27, 2023, indicated that the Ministry was taking administrative steps to ensure that payments of coupons and principals of the old bonds resumed by March 13, 2023, in fulfillment of the assurance given by the Government to bondholders who did not tender.

Despite these assurances, the Ministry of Finance has failed to pay the coupon and principal payments due to individual bondholders, causing them to express their dissatisfaction with the Ministry’s handling of the situation. The bondholders have called on the Securities and Exchange Commission (SEC) and the Ghana Stock Exchange to enforce the rules of full disclosure required by all issuers, including the Government of Ghana.

Regulation 51(2) of the Ghana Fixed Income Market regulations requires an issuer of admitted securities to maintain high standards of disclosure, fully disclose to the public the information necessary to make informed investment decisions, secure the immediate release of information that may be reasonably expected to have a material effect on the market activity and price of its admitted securities, ensure the maintenance of a fair and orderly market in its securities, and ensure that all investors have simultaneous and equal access to the same information. However, it appears that the Ministry of Finance has failed to comply with these regulations, leaving individual bondholders in the dark about the status of their investments.

The SEC is charged with a mandate to protect investors and market integrity but has maintained a loud silence throughout this period on the plight of individual bondholders. The Ghana Fixed Income Market of the Ghana Stock Exchange, where the old Government of Ghana bonds are listed and traded, has also not enforced its basic rules of disclosure required by issuers.

The failure of the Ministry of Finance to fulfill its obligation to pay coupon and principal payments due to individual bondholders has eroded confidence in the markets and the Government’s credibility, creating a situation that could have long-term implications for the economy. It is imperative that the Government takes immediate steps to address the concerns of individual bondholders and restore confidence in the markets.
The current situation highlights the importance of adhering to regulations governing the securities market and fulfilling obligations to investors. The failure to do so can have far-reaching implications for the economy and erode investor confidence. The Government of Ghana must take immediate action to address the concerns of individual bondholders and restore confidence in the markets to avoid further damage to the economy.