Individual bondholders head to court over domestic debt exchange

Bright Simons of IMANI Africa has warned that government's decision to include individual bondholders in its Domestic Debt Exchange programme (DDE) is set to be challenged in the courts.

According to him, three groups representing individual bondholders are mobilizing to file a class action lawsuits against the government.

Individual bondholders were included in the DDE which was announced by Minister of Finance late last year after labour organizations forced government to remove pensions from the DDE programme.

"It was anticipated that adding individual/retail investors to Ghana's debt default will increase the risk of litigation," Simons noted in a January 7, 2023 tweet,

Adding: "At least 3 groups representing individual bondholders have commenced mobilisation to file class action lawsuits. One group is led by a former SEC Boss."

Ghana is currently facing economic headwinds on the back of a cedi that depreciated massively in 2022 against the dollar, galloping inflation as well as credit downgrades by the three major ratings agencies.

Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund (IMF) facility to support the failing economy.

Minister of Finance Ken Ofori-Atta on December 6 announced that government was restructuring bonds held by institutional investors, putting them into four groups stretching 15 years. With interest also spread in four tranches in four years.

The programme faced stiff opposition from major professional groups and workers union in the country because of its pension component.

It was anticipated that adding individual/retail investors to Ghana's debt default will increase the risk of litigation. At least 3 groups representing individual bondholders have commenced mobilisation to file class action lawsuits. One group is led by a former SEC Boss.

— Bright Simons (@BBSimons) January 7, 2023