Market News

Fitch Deepens Ghana Junk Rating on Debt-Restructuring Concerns + - BLOOMBERG

SEPTEMBER 23, 2022

(Bloomberg) -- Fitch Ratings cut Ghana’s credit assessment further into junk on concerns the West African country may restructure debt as interest costs surge.

The ratings agency lowered Ghana’s long-term issuer default rating to CC, or four levels below investment grade, from CCC, according to a statement Friday. The assessment signifies a “very high level of credit risk” where a “default of some kind appears probable,” according to Fitch’s rating scale.

“The downgrade reflects the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to eurobond markets,” Fitch said. “We believe there could be an incentive to spread a debt restructuring burden across domestic and external creditors.”

Ghana is considering reorganizing part of its $19 billion of local debt in order to secure a $3 billion loan from the International Monetary Fund, Bloomberg reported this week. External liabilities could also be included depending on how much Ghana would have to reduce its debt-servicing costs to achieve fiscal sustainability, according to people familiar with the situation.

“There is a high likelihood that the IMF support program currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of GDP,” Fitch said. “The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shock to market access and high debt servicing costs. Interest costs have risen substantially since then.”

Ghana’s 2026 dollar bonds fell 1.1% to 57.42 cents on the dollar by 4:20 p.m. in the capital, Accra, driving the yield 47 basis points higher to 28.94%. The securities have slumped 6% this week. Domestic notes are trading at an average yield of 38.9%, according to the AFMI Bloomberg African Bond Index.


This website uses cookies We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you've provided to them or that they've collected from your use of their services
Real Time Analytics