Deputy Finance Minister John Kumah has assured that Individual bondholders will be paid their respective coupons upon maturity even if they do not sign on to the Debt Exchange Programme proposed by the Government.

According to Dr John Kumah who cautioned against the risky choice, as long as bondholders hold on to their existing bonds till maturity, they will be paid.

He said “Individual bondholders have been given the option – please you can stay out and keep to your old bonds. Government has promised to honour the old bonds as and when they are due”.

Dr John Kumah gave this assurance in an interaction on Joy FM’s Super Morning Show on Wednesday.

He however, encouraged individual bondholders to sign onto the DDE programme so as to engender the creation of a more vibrant market.

Asked if the value of bonds not rolled onto government's new programme are guaranteed, John Kumah said that may not be the case.

“This one, maybe, it is when you talk to a finance expert that they will tell you that the fact that your bond will be paid on maturity doesn’t mean that today the current value of the bond is X or Y amount.

“And this is where we thought in the end, it was advisable to rope in the individual bondholders for their own good. Because once you carve out 90% of the market and you ask me to hold on to the 10% you have virtually reduced the value of my bond unless I hold on to maturity,” he explained further.

The Deputy Finance Minister expressed the conviction that the fortunes of the individual bondholders are better secured if they sign onto the government programme.

The Finance Ministry on Tuesday offered yet another opportunity for domestic bondholders to take up government’s offer to roll onto its proposed debt exchange programme when it extended the deadline for signing up by one week.

The offer notice also cautioned of serious challenges should the bondholders keep their bonds and later decide to offload them ahead of maturity.

The market for the old bonds will shrink considerably and thus impose difficulties for holders deciding to sell prematurely.

Dr Kumah asked bondholders to seek expert financial advice on implications of the government’s new terms.

This, he explained, is because, “it is based on the basic principles of demand and supply and once you transition about 90% of your bond market to a new bond market, those left in that old bond have less demand and it is going to affect the value of their bonds.”

“If you say that you will not do it but others should do it to create the capacity so that you have certainty for your returns, then you are not helping the process. So let’s all be part of the process,” he added.