Following Finance Minister Cassiel Ato Baah Forson’s call for ‘shock therapy’ spending cuts, Ghana’s dollar-denominated bonds fell nearly 1.5 cents. The 2035 maturity bonds dipped to an eight-week low. The finance minister noted substantial external debt service costs over the next four years, after a $13 billion bond restructuring in October due to a 2022 debt default.
Ghana’s international dollar-denominated bonds experienced a decline of nearly 1.5 cents on Tuesday, following Finance Minister Cassiel Ato Baah Forson’s announcement regarding necessary ‘shock therapy’ spending cuts. The 2035 maturity bonds led this decline by falling to an eight-week low before partially rebounding to a 1.15 cent loss, with a bid price of 70.61 cents on the dollar, as reported by Tradweb data.
During his initial budget presentation under President John Dramani Mahama, Forson indicated that the government is also grappling with substantial external debt service obligations over the upcoming four years. Recently, Ghana concluded a restructuring process involving $13 billion of international bonds in October, following a distressing debt default that occurred in 2022.
In summary, Ghana’s announcement of spending cuts has negatively impacted its dollar-denominated bonds, reflecting market concerns about the government’s financial stability. The latest bond figures demonstrate the pressure on Ghana’s economy, exacerbated by substantial external debt service costs and previous debt restructuring.
Original Source: www.tradingview.com
