Some Eurobond investors impacted by Ghana’s Domestic Debt Exchange Programme (DDEP) have initiated legal action against commercial banks over their role in restructuring bonds.
According to JOYBUSINESS, lawyers representing the aggrieved investors have formally notified the banks of their intention to sue for losses incurred due to the restructuring and the resulting haircut on their investments. The investors claim they trusted the commercial banks when making their investments.
Some investors who did not participate in the DDEP are also among those taking legal steps due to the financial losses they experienced after their investments lost value.
Background:
In September 2024, the government launched the Debt Exchange Programme for Eurobond holders, inviting bondholders to swap old bonds for new ones. The offer, which ran until September 30, 2024, included options such as the PAR Option with a lower interest rate of 1.5% and the DISCO Option with a 37% nominal haircut but higher interest rates (5%-6%). The government claimed to save about $5 billion in debt service from the restructuring.
Ghana Association of Banks’ Response:
John Awuah, CEO of the Ghana Association of Banks, called the legal threat “surprising.” He clarified that the banks acted solely as agents for the government in distributing the Eurobond issuance and emphasized that the bonds came with a prospectus that included collective action clauses. He pointed out that the commercial banks could not be held liable for any failures by the government.
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