S&P Global Ratings has upgraded Ghana’s local-currency debt rating to CCC+ from SD (selective default) following the successful exchange of domestic debt securities with bondholders. However, the rating agency continues to assess Ghana’s foreign-currency debt as SD, as the government works towards restructuring its external bonds.
Analysts Frank Gill and Ravi Bhatia noted that the Ghanaian authorities intend to reduce debt to GDP to approximately 55% over a five-year horizon and discussions with foreign currency instrument holders are ongoing.
Ghana has been working to restructure $30bn of its $46bn of local and international debt, and it has already completed the first part of a domestic restructuring with investors exchanging 64% of holdings, or 83 billion cedis ($6.7bn), for new securities against an overall target of 80%.
The country’s Minister of Finance, Ken Ofori-Atta, said that substantive discussions with international bondholders and their advisers are expected to commence in the coming weeks.
However, payments on individual bonds have been suspended during ongoing discussions, leading S&P to lower the ratings on three UK-law Eurobonds to D, or default. A coupon payment on a dollar bond due in 2026 has been missed, and a panel of dealers and investors is reviewing whether this constitutes a credit event that may trigger the payout of insurance protection on the debt.
Fitch Ratings recently downgraded Ghana’s local-currency credit score to default and its foreign-currency debt rating to partial default after the country missed a eurobond payment.
Ghana’s debt restructuring efforts are being closely monitored by investors, particularly given the country’s high debt-to-GDP ratio and the economic impact of the COVID-19 pandemic.
Leave feedback about this