Ghana’s dollar bonds dropped by over 2 points across the curve as it unilaterally decided to suspend interest payments on its on offshore bonds, commercial loans and most bilateral obligations pending an agreement with creditors. This decision was made by the Ministry of Finance ahead of the IMF board’s pending approval of its $3bn bailout. The Finance Minister said, “We would like to certainly go to the IMF board as soon as possible… my suspicion is that we’ll get to a good discussion and announce the measures before end of this year”.

Analysts note that the unilateral decision by Ghana is a surprise and reduces the chances of an amicable restructuring negotiation with further losses expected in its bonds. Ghana had secured the IMF deal after its local bondholders were asked to accept losses on interest payments, but had not revealed any plans regarding offshore bonds. Last month, the Finance Minister had hinted that international bondholders may see a 30% haircut on the principal and forgo some interest payments as part of its debt-sustainability plan to secure a the IMF loan.

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