Ghana’s Dollar Bonds Decline Following “Shock Therapy” Spending Cuts

Ghana’s dollar bonds fell nearly 1.5 cents after Finance Minister Cassiel Ato Baah Forson announced “shock therapy” spending cuts. The 2035 bonds hit an eight-week low before recovering slightly to a 1.15-cent loss. The Minister also highlighted the significant external debt service costs the government faces over the next four years.

Ghana’s dollar-denominated bonds experienced a decline of nearly 1.5 cents on Tuesday following Finance Minister Cassiel Ato Baah Forson’s declaration of the need for “shock therapy” spending cuts. The bonds maturing in 2035, identified as XS2893151287=TE, were particularly affected, initially dropping to an eight-week low before concluding with a loss of 1.15 cents, trading at 70.61 cents on the dollar according to Tradweb data.

Minister Forson delivered his remarks during the first budget presentation under President John Dramani Mahama, indicating that the nation is facing substantial external debt service obligations over the forthcoming four years. This announcement comes on the heels of Ghana’s recent restructuring of $13 billion in international bonds, which followed a challenging debt default in 2022.

In summary, Ghana’s dollar bonds have declined following a government announcement emphasizing the necessity of spending cuts, described as “shock therapy”. This statement from the Finance Minister highlights the significant external debt challenges that the country is poised to confront in the years ahead while reflecting on the recent restructuring efforts following a major debt default.

Original Source: www.tradingview.com