(Bloomberg) -- Ghana asked local bondholders to accept losses on interest payments as it restructures its debt to qualify for a loan from the International Monetary Fund. 

The West African country will replace existing local-currency debt with four new bonds maturing in 2027, 2029, 2032 and 2037, Finance Minister Ken Ofori-Atta said. 

“The annual coupon on all these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity,” he said in the video posted late Sunday on the Ministry of Information’s Facebook page. Coupon payments will be semi-annual.

“There will be no haircut on the principals of bonds,” he said on the local-debt restructuring. “External-debt restructuring parameters will be presented in due course.”

The yield on Ghana’s 2032 eurobonds rose 25 basis points to 27.57% at 9:16 a.m. in London on Monday. The yield has declined from a record 33.45% since Ghana first flagged details of plans to restructure its debt.

Ghana is negotiating a $3 billion program with the IMF after being shut out of international debt markets amid a selloff of its dollar bonds that lifted yields to distressed levels. Part of the IMF’s lending requirements is that Ghana get its debt on a sustainable path to qualify for support. The country had 393.4 billion cedis ($28.1 billion) of debt at the end of June, and debt-serving costs equivalent to 68% of tax revenue over the same period, according to budget data.

The cedi, the world’s worst-performing currency against the dollar this year, has lost 56% of its value, increasing the cost of servicing the loans.

While the world’s second-biggest cocoa producer has no dollar-debt maturing until July 2023, it faces 43.5 billion cedis of domestically sold local-currency bonds maturing through the end of June, according to data compiled by Bloomberg. On top of that, it has $663 million of coupon payments on dollar debt. 

Ghanaian lenders will be the most impacted by the government’s move, as they held 32% of outstanding government bonds at the end of August, the biggest chunk among other groups including individual and foreign investors, according to data from the Central Securities Depository Ghana Ltd.

The Bank of Ghana and other financial regulators will ensure that impact is “minimized,” Ofori-Atta said. The government is also putting together a financial stability fund with development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers and collective investment schemes, he said.

Treasury bills will be excluded from the local-debt restructuring to protect small investors and individuals, according to Ofori-Atta. 

--With assistance from Robert Brand.

(Updates with bond moves in fifth paragraph. An earlier version of this story corrected the date of 5% coupon payment in the third paragraph)

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