Associate Professor of Finance at Andrews University, Professor Williams Peprah, has urged the Finance Minister, Ken Ofori-Atta to seek out Vulture investors to augment whatever money the government will receive from the International Monetary Fund (IMF).
Vulture investors are individuals or funds that buy securities in distressed investments, such as high-yield bonds in or near default or equities in or near bankruptcy.
According to Professor Peprah, Ghana’s recent downgrading by Moody’s to Ca from Caa2 or further junk status, which is a devastating blow to the country’s prospects also poses an opportunity to attract these vulture investors to invest in the economy.
He stated that with the country now at a junk status, Ghana’s highly distressed bonds will be desirable to these high risk investors who will be anticipating the high yields in the long-term when the economy rebounds.
Speaking on JoyNews’ PM Express, he said, “Let me give you some positive signals of the ratings. We have been talking that it’s going to affect Ghana but there are some positive signals. There are some investors we call them vulture investors, they are interested in distressed bonds.
“So if I were the Finance Minister by now I will be coming to the US to look out for Vulture investors. They will be prepared to give money to Ghana government and wait for a long period. When they do that the returns is abnormal. They are not afraid of risk.
“That is probably what I was expecting the Finance Minister to be traveling around and be talking to people. He did that in the first year when he came into government. The Templeton fund that came in, Templeton is a vulture investor.
“The first 3billion he gave, he profited 20% and we have paid for three years. So he may have to go and look for vultures who can give us money for a longer period alongside what IMF is giving to us.”
His suggestion is in reaction to Moody’s downgrading the Government of Ghana’s long-term issuer ratings to Ca from Caa2 or further junk status.
This concludes the review for downgrade that was initiated on September 30, 2022.
“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022″, a statement published on its website said.
The statement pointed out that “given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability”.
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