Fitch Downgrades Ghana To ‘RD’

Rating Agency Fitch has downgraded Ghana’s Long-Term (LT) Local Currency (LC) Issuer Default Rating (IDR) to Restricted Default (RD).

The recent rating is from the previous rating of ‘C’.  

In November 2022, the rating agency warned that Ghana’s sovereign credit rating may face another downgrade closer to default if talks with the International Monetary Fund for a $3 billion package lead to debt restructuring.

With the recent rating, Fitch says, Ghana is in default.

Ghana’s creditworthiness has been downgraded since last year by different international rating agencies including Moody’s.

In September 2022, Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) were downgraded to ‘CC’, from ‘CCC’.

In August of that same year, Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) was downgraded to ‘CCC’ from ‘B-‘

The current RD means Ghana has experienced an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and has not otherwise ceased operating.

This follows confirmed Local Currency Debt Restructuring, the Agency said.

Meanwhile, the issue ratings on Ghana’s local-currency bonds issued domestically have also been downgraded to Default (D) from ‘C’. 

Fitch has affirmed Ghana’s Long-Term Foreign Currency (FC) IDR at ‘C’.

The agency based the rating on the confirmed debt exchange programme; the Material Reduction in Terms; Distressed Local Currency Debt Exchange; Missed Local Currency Principal Payment; projected reduction in interest payment in 2023; Suspension of payments on selected external debt, etc.

It warned that Ghana could see a further negative rating action if it fails to make scheduled coupon or maturity payments on its foreign-currency bonds within the grace period.

Additionally, it said a further downgrade could result from the country’s failure to honour interest and principal payment on maturing bonds to holders who opted out of the debt exchange during the grace period as promised by the government.

Source: opemsuo.com/Hajara Fuseini