Fitch downgrades Ghana’s rating to further junk status

Rating agency, Fitch, has downgraded Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to ‘CC’ or further junk status, from ‘CCC’.

This is the second time in 2022 that it has downgraded Ghana’s credit worthiness.

The downgrade, it said, 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.

“There is a high likelihood that the International Monetary Fund support programme currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of Gross Domestic Product”.

“We believe this will be in the form of a debt exchange and will qualify as a distressed debt exchange under our criteria”, it explained.

The government has not confirmed or denied press reports that Ghana is preparing to negotiate a restructuring.

The rating agency added interest costs on external debt are lower than for domestic debt and near-term external debt amortisations appear manageable.

“However, we believe there could be an incentive to spread a debt restructuring burden across domestic and external creditors and therefore do not have a strong basis to differentiate between Foreign- and Local-Currency ratings at this time”.


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