Fitch, the rating agency, has communicated its intention to assign Ghana a positive rating once the country resolves its relations with a significant majority of non-tendered securities bondholders and completes the restructuring of local-currency bonds held by pension funds.
According to the UK-based firm, this rating would be based on a forward-looking assessment of Ghana's willingness and capacity to fulfil its local-currency debt obligations.
This assessment hinges on Ghana's successful normalization with non-tendered bondholders and completion of the local-currency bond restructuring linked to pension funds.
Furthermore, Fitch outlined that when Ghana achieves an agreement with private creditors concerning the restructuring of its foreign-currency-denominated debt, following the Common Framework official creditors' claims treatment, it will assign a Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR) based on a forward-looking evaluation of the nation's commitment and capability to meet its foreign-currency debt obligations.
However, Fitch also cautioned that it would consider downgrading Ghana if there is an elevated risk that the country fails to honour the first coupon payments on bonds due in August 2023.
Fitch's Sovereign Rating Model (SRM) currently scores Ghana equivalent to a ‘CCC+' rating on the Long-Term Foreign-Currency IDR scale.
However, the agency did not use the SRM and Qualitative Overlay (QO) in this case, opting instead to apply ratings guided by definitions for ‘CCC+' and lower categories.
Fitch's SRM employs 18 variables based on three-year-centred averages, including a one-year forecast, to generate a score equivalent to an LT FC IDR.