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Fitch to downgrade Ghana to very deeper junk status; Ghana’s Issuer Default Rating now C

Rating agency, Fitch, has given an indication of a further downgrade of Ghana’s credit rating to very deeper junk status...

Fitch to downgrade Ghana to very deeper junk statu
Fitch to downgrade Ghana to very deeper junk statu

Rating agency, Fitch, has given an indication of a further downgrade of Ghana’s credit rating.

to very deeper junk status.

nnThis is coming after it downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to.

C on December 21, 2022 from ‘CC’ as well as the issue ratings on outstanding.

foreign-currency debt.

nnIt has also downgraded the issue rating on Ghana’s partially-guaranteed USD1 billion notes maturing in.

2030 to CC from B-.

nnFitch said the suspension of interest payments on selected external debt, including Eurobonds, commercial term.

loans, and most bilateral debt is the beginning of a sovereign default process.

nnOn 20 December, the government announced plans to restructure its external sovereign debt, which will.

add to the pressure on banks’ capital.

Details have yet to be announced but payments on selected external debt, including Eurobonds, commercial.

term loans, and most bilateral debt, have been suspended.

Fitch views this as the beginning of a sovereign default processnnUS-based, S and P Global.

Rating also lowered the sovereign rating on Ghana to selective default from CC, a day.

after the country announced it would suspend its debt payments to some external creditors including.

holders of Eurobonds.

nnFitch explained further that the downgrade of Ghana’s LTFC IDR reflects the government’s announcement of.

a suspension of payments on sovereign external debt, which it views as the beginning of.

a sovereign default process.

nnFitch downgraded Ghana’s LT IDRs to CC from CCC on September 23, 2022 to indicate.

the increasing probability of a default event as a result of increasing pressure on external.

finances and in anticipation that an International Monetray Fund-supported programme would require some form of.

debt restructuring.

nnGhana’s already-high debt servicing burden and constrained access to finance both worsened during the successive.

shocks of the coronavirus pandemic and the Ukraine-Russia war, leading the government to seek IMF.

support in July 2022.

nnPartially guaranteed notes included in restructuringnnFitch has also downgraded the issue rating on Ghana’s US.

dollar notes due October 2030 to CC from B.

nnThe notes benefit from a partial credit guarantee (PCG) backed by the International Development Association.

of the World Bank for scheduled debt service payments up to 40percent of the original.

principal.

nnFitch stated that it had assigned a multiple-notch uplift to the notes to reflect its.

view that the PCG reduces the bonds’ potential for default and increases the possible recovery.

in the event of issuer default.

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