Morgan Stanley raises the “recovery” value of Ghana Eurobonds from $41 to $46.
Johannesburg, South Africa (Reuters) -After Ghana made a deal to restructure its local currency debt, investment bank Morgan Stanley (NYSE: MS) raised the average “recovery value” for the country’s defaulted dollar-denominated government bonds to $46 from $41.
The government, which is facing a once-in-a-generation economic crisis, said this week that it had finished a domestic debt exchange with 85% participation of “eligible” bonds, or 64% of the 130 billion cedis ($10.8 billion) that were supposed to be restructured before unions threatened to strike and pension funds were left out.
Morgan Stanley lowered its “exit yield” prediction for Ghana’s foreign currency bonds from around 15% to 13-14% and estimated that the domestic debt exchange would save the government about $7.8 billion from 2023 to 2028, instead of the $7 billion it had predicted before.
In a research note that came out late Thursday, the bank said, “We still feel the same way about hard currency bonds.”
It said that the so-called net present value (NPV) loss for domestic bonds would be 51%, compared to an average of 21% in other local debt restructurings in countries like Jamaica, Nicaragua, and Cyprus over the past 15 years.
Ken Ofori-Atta, Ghana’s finance minister, told parliament on Thursday that important talks with international bondholders would take place in the next few weeks.
Ghana has about $13 billion in international bonds that are denominated in dollars, or “Eurobonds.” On Friday, most were being sold for between 37 and 41 cents on the dollar.
($1 = 12.0000 Ghanaian cedis)