In its latest report, the agency assigned a Restricted Default (RD) status to the Long-Term Local Currency (LC) Issuer Default Rating (IDR), which was downgraded from ‘C.'
The agency stated that the downgrade was due to the government's decision to embark on a debt exchange program and the recent default on local bonds. Fitch attributed the downgrade to the bonds that matured on February 6, 2023, and another one due for payment this week.
The recovery program is part of the government's plan, for which they are seeking the International Monetary Fund's support in the form of a three-year Extended Credit Facility (ECF) of about $3 billion.
While Fitch affirmed Ghana's Long-Term Foreign Currency (FC) IDR at ‘C,' it typically does not assign rating outlooks to sovereigns with a rating of “CCC+” or below.
Fitch had downgraded the Long-Term Foreign Currency Issuer Default Ratings (IDR) to “C” from “CC” on December 21, 2022, following the government's announcement of a suspension of payments on selected external debt.
Ghana then requested official creditors to restructure its external debt under the G20 Common Framework. As a result, the Eurobond coupon payment due on January 18, 2023, was not honoured.
Fitch said it would also downgrade the LT FC IDR to “RD” after the end of the grace period for this coupon payment, which expires on Feb. 17, 2023.
Fitch also downgraded the issue rating on Ghana's U.S. dollar-denominated notes due October 2030 to “CC” from “B-” on December 21, 2022.
However, it affirmed the “CC” rating for the partially guaranteed U.S. dollar-denominated notes due October 2030. The notes benefit from a partial credit guarantee (PCG) backed by the International Development Association.