Fitch Ratings has indicated that it will assign Ghana’s Long-Term Local-Currency Issuer Default Rating based on a forward-looking assessment of the country’s willingness and capacity to repay its local currency debt.
This follows the completion of the Domestic Debt Exchange.
In its latest rating of Ghana, Fitch, said once Ghana reaches an agreement with private creditors on the restructuring of its foreign currency-denominated debt and completes that restructuring process following the Common Framework official creditors’ claims treatment, it will assign a Long-Term Foreign-Currency Issuer Default Rating based on a forward-looking assessment of its willingness and capacity to honour its foreign-currency debt.
It explained, “evidence that the partially-guaranteed notes will be excluded from the external debt restructuring could lead to an upgrade of the issue rating on the partially guaranteed notes”.
Fitch on February 14, 2023, downgraded Ghana’s creditworthiness to further junk status.
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 government to embark on the debt exchange programme and the recent default on local bonds that matured on February 6, 2023, and another one that is 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.”
Source: Business Analyst