S&P Downgrades Ghana To CC

Rating agency Standard and Poor’s (S&P) has degraded Ghana’s Foreign Currency and Local Currency credit rating.

The agency downgraded the country from CCC+ where it was pegged in August to “CC”.

It announced this in a press release days after Moody’s released a similar downgrade for Ghana’s long-term issuer ratings from Caa2 to Ca citing projected substantial losses in the restructuring of both local and foreign currencies debts planned by the government.

S&P’s rating reflects the government’s proposed local debt exchange programme.

The agency finds the programme as a “distressed exchange offer,” earning those bonds the “selective default” rating.

The outlook is now negative.

The current rating on Ghana tells investors that the country is currently vulnerable to nonpayment and dependent on favourable business, financial and economic conditions.

Moody’s in its recent downgrade of Ghana said, “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.

“Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt for the government to meaningfully improve debt sustainability.

“The stable outlook balances Moody’s assumption that the debt restructuring will happen in coordination with creditors and under the umbrella of a funding program with the IMF against the potential for a less orderly form of default that could result in higher losses for private-sector creditors.”

Source: opemsuo.com/Hajara Fuseini