Fitch Ratings has assigned a ‘CCC+’ rating to Ghana’s new U.S. dollar bonds following the government’s successful restructuring of its Eurobond debt.
The rating agency in a report said it had also upgraded Ghana’s Long-Term Local-Currency (LTLC) and Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’, reflecting growing confidence in the country’s domestic credit profile.
It, however, stated that Ghana’s Long-Term Foreign-Currency (LTFC) IDR remained affirmed at ‘RD’ (Restricted Default) due to its continued default on portions of external commercial debt, pending further restructuring.
The new debt instruments, issued as part of a broader fiscal consolidation strategy, signal some recovery potential for Ghana, though Fitch refrains from issuing an outlook on sovereigns rated below ‘CCC+.’
Under the restructuring terms, investors had two options: a “disco” option involving a 37 per cent nominal haircut, with bonds maturing in 2029 and 2035, and a “par” option that preserved the principal but pushed maturity out to 2037.
The exchange included zero-coupon amortising notes to address accrued interest
The restructuring marks a significant reduction in Ghana’s
foreign currency debt burden, amounting to around 6 per cent of GDP in 2024.
This will also ease debt service payments by $3.5 billion over the 2024-2026 period, relieving some of the immediate fiscal pressure. However, risks remain elevated, with interest payments still consuming a substantial portion of government revenue.
