Fitch downgrades Ghana’s borrowing capacity to ‘Restrictive Default’

 Fitch Ratings has down­graded Ghana’s Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to ‘RD’ from ‘CCC’.

It has also downgraded to ‘CC’ from ‘CCC’, and subsequently withdrawn the issue ratings on five local-currency bonds issued prior to the domestic debt exchange programme.

Fitch in a report affirmed the is­sue rating of local-currency bonds issued on the completion date of the domestic debt exchange at ‘CCC’.

It attributed the rating action to missed payments on some of the local-currency bonds issued prior to the domestic debt exchange programme.

“The downgrade of Ghana’s LTLC IDR to ‘RD’ reflects the missed payments on some lo­cal-currency-denominated bonds that were not tendered or that were held by entities not eligible for participating in the domestic debt exchange,” the report said.

These five bonds are ISIN no. GHGGOG044744, GHG­GOG066150, GHGGOG043563, GHGGOG065475, GHG­GOG044751.

Following a meeting with representatives of individual bondholders and pension funds, the government announced having reached an agreement on a pathway towards the settlement of the outstanding debt obliga­tions by April 28, 2023.

Fitch said the announcement did not clarify whether missed payments will be settled to all cat­egories of holders of ‘old bonds’ or only to these two categories.

Fitch affirmed the ‘CCC’ issue rating of local-currency bonds issued on the completion date of the domestic debt exchange pro­gramme (the “new bonds”) that was assigned on March 22, 2023.

The first coupon payments on the new bonds are due in August 2023.