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Refusing debt exchange programme will bar bondholders from benefiting – Finance Ministry restates position

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The Ministry of Finance has restated that eligible bondholders who refuse to participate in government’s debt exchange programme will not benefit from the new arrangement outlined by government in case there is default in payment.

Government, is seeking an International Monetary Fund Programme that requires a debt restructuring before a deal could be reached with the Bretton woods institution. Bondholders have until January 17, 2023 to accept the new arrangement which include some suspension of interest payment.

“For those not participating in the domestic debt exchange, they will continue to hold the non-tendered eligible bonds – the “old” bonds. However, the Government reserves the right to ensure that “old” bonds do not benefit from their non-participation in the domestic debt exchange, including through additional regulatory measures”, the Ministry, in a Frequently Asked Questions (FAQs) statement said.

The statement assured that once the domestic debt exchange is successfully completed, and progress is made on securing international financial support, the Government will benefit from macroeconomic stability, larger fiscal space, and new affordable debt service obligations.

It added that associated risks and discount factors are expected to then go back to reasonable levels, close to one-digit territory.

“As such, the new bonds are expected to ensure the maximum recovery possible for the domestic financial sector under our very constrained fiscal and debt situation.”

Eligible Holders seeking to participate must were advised to ensure Offer or Exchange Instructions are submitted and received by the CSD before the expiration date.

Participants (the Depository Participants) are required to forward to the CSD the collated file containing the information on each Offer or Exchange Instruction received from each holder of Eligible Bonds that expressed interest to participate in the Invitation to Exchange on or before 4:00 p.m.

Government further extends deadline

Government announced a further extension of the Domestic Debt Exchange expiration date to January 17, 2023.

According to a press release from the Finance Ministry on Saturday, December 24, it has amended the terms of the Debt Exchange.

“The Government announced its decision to extend the Expiration Date of the Invitation from Friday, December 30, 2022, at 4 pm (GMT) to Monday, January 16, 2023, at 4 pm.

“The Settlement Date for the Invitation is now expected to occur on Tuesday, January 24, 2023, or as soon as practicable thereafter, but no later than the Longstop Date which is now scheduled for Tuesday, January 31, 2023, unless further extended by government pursuant to the Invitation.

“The Announcement Date is now expected to occur on or about January 17, 2023,” the Ministry said.

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