Fitch downgrades Ghana’s creditworthiness to deeper junk status

International ratings agency, Fitch Ratings, has downgrad­ed Ghana’s creditwor­thiness to further junk status.

In its latest report on Ghana, it said “Fitch Ratings downgrad­ed Ghana’s Long-Term Local Currency (LC) Issuer Default Rating (IDR) to Restricted De­fault (RD) from ‘C’.”

It attributed the downgrade to the decision by the govern­ment to embark on the debt exchange programme and the recent default on local bonds that matured on February 6, 2023 and another one due for payment this week.

“The downgrade of Ghana’s local currency denominated debt follows the completion of a domestic debt exchange offer by the Republic of Ghana. This transaction is an element of the recovery programme for which the government is seeking the support of the International Mon­etary Fund for a 3-year Extended Credit Facility (ECF) of about $3 billion”.

Fitch also affirmed Ghana’s Long-Term Foreign Currency (FC) IDR at ‘C’, saying, “Fitch typically does not assign Rating Outlooks to sovereigns with a rating of ‘CCC+’ or below”.

Foreign-currency debt not affected

Fitch downgraded the Long-Term Foreign Currency Issuer Default Ratings (IDR) to ‘C’ from ‘CC’ on December 21, 2022 following the government’s announcement of a suspension of payments on selected external debt.

Ghana subsequently asked of­ficial creditors for a restructuring of its external debt under the G20 Common Framework.

 A Eurobond coupon payment, due on January 18, 2023, has not been honoured.

“Fitch also affirmed the LT FC IDR at ‘C’, but will down­grade it to ‘RD’ after the end of the grace period for this coupon payment that expires on Feb. 17, 2023”, it said Partially guaranteed notes not affected

Fitch downgraded the issue rating on Ghana’s U.S. dollar-de­nominated notes due October 2030 to ‘CC’ from ‘B-‘on Decem­ber 21, 2022.

The notes benefit from a par­tial credit guarantee (PCG) backed by the International Development Association for scheduled debt service payments up to 40 per cent of the original principal.


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