Ghana’s dollar bonds rally after debt relief announcement

Ghana’s financial outlook received a boost following Finance Minister Ken Ofori-Atta’s announcement of an impending debt relief agreement during his annual budget speech. The forthcoming accord, aimed at restructuring the nation’s bilateral obligations, is a pivotal element of the International Monetary Fund’s (IMF) $3 billion assistance program.

In response to the minister’s statement, there was a noticeable increase in the value of Ghana’s dollar-denominated bonds today. Notably, the 2027 Eurobond experienced a rise of 0.71 cents, reaching 42.93 cents on the dollar in London trading. Similarly, the 2051 notes also gained ground, climbing by 0.74 cents to 42.13 cents.

The signing of this debt restructuring agreement is anticipated to be a key milestone for Ghana, setting in motion the release of a second tranche of $600 million from the IMF under its extended credit facility. This disbursement forms part of an overarching strategy by the Ghanaian government to achieve debt sustainability. The plan involves reorganizing nearly all of the country’s estimated $50 billion debt in line with the conditions stipulated by the IMF program initiated in May.

Investors have reacted positively to this development, as evidenced by the uptick in bond prices, signaling renewed confidence in Ghana’s commitment to stabilizing its economy and addressing its debt challenges.

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