Fitch has downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’ after the government failed to make a coupon payment ($40.6 million) on one of its Eurobonds within the grace period.
Fitch does not normally give Outlooks to sovereigns with ratings of ‘CCC+’ or lower.
Rating has downgraded and removed the country’s $1 billion Eurobond expiring on January 18, 2026 from ‘C’ to ‘D’.
It confirmed and removed all long-term senior unsecured foreign-currency-denominated issuance ratings at ‘C’. It also confirmed the partly guaranteed $1 billion bonds due in 2030 at ‘CC’.
Again, “issue ratings for all other long-term senior unsecured foreign-currency (FC)-denominated instruments have been withdrawn as these instruments are no longer considered by Fitch to be relevant to the agency’s coverage given that the sovereign has announced a moratorium on these instruments and they will be included in the common framework external debt restructuring”, it said
Fitch anticipates all of the outstanding instruments to default in due course, either because the sovereign fails to make debt service payments or because an agreement on bond restructuring is achieved.
Ghana failed to make the $40.6 million coupon payment on its $1 billion 2026 Eurobond on Friday, as part of the suspension of payments on selected external debt declared by the government in December, according to Fitch.
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The country owns around $13 billion in dollar-denominated international bonds, often known as Eurobonds.
On Tuesday, the majority of the debts were trading between 37 cents to 41 cents on the dollar.
Fitch had previously cut Ghana’s local debt rating to’restricted default’ on February 14, 2023.
Ghana’s DDEP
On February 14, 2023, the Ministry of Finance stated that about 85% of bondholders engaged in the Domestic Debt Exchange Plan (DDEP).
This amounted to $82.99 billion (¢82,994,510,128).
“The Government is pleased with the results, as a substantial majority of the Eligible Holders have tendered,” a statement from the ministry said.
It added that the result is a significant achievement for the government to implement fully the economic strategies in the post-COVID-19 Programme for Economic Growth (PC-PEG) during the current economic crisis.
The government is extending the Settlement Day of the Exchange from the originally stated February 14, 2023 to February 21, 2023 to provide for adequate time to settle the New Bonds in an effective manner, according to the announcement.
SOURCE: myjoyonline
