The newest downgrade by Fitch Ratings noticed Ghana’s long-term native and foreign-currency issuer default scores (IDRs) drop to ‘CC’, from ‘CCC’.
This comes nearly a month after the country suffered successful when its credit standing was downgraded by Fitch Ratings from B- to CCC in August 2022.
There was no outlook for this ranking since Fitch doesn’t usually assign outlooks to scores of ‘CCC+’ or under.
KEY RATING DRIVERS
Increased Probability of Debt Restructuring: The downgrade displays the elevated chance that Ghana will pursue a debt restructuring given mounting financing stress, with surging curiosity prices on home debt and a chronic lack of entry to Eurobond markets. There is a high chance that the IMF help programme currently being negotiated will require some type of debt treatment due to the climbing curiosity prices and structurally low income as a proportion of GDP.
We imagine this will be within the type of a debt change and will qualify as a distressed debt change under our standards. The government has not confirmed or denied press experiences that Ghana is getting ready to negotiate a restructuring. Interest prices on exterior debt are decrease than for home debt and near-term exterior debt amortisations seem manageable. However, we imagine there might be an incentive to unfold a debt restructuring burden throughout home and exterior collectors and due to this fact shouldn’t have a robust foundation to differentiate between Foreign- and Local-Currency scores at this time.