Fitch Ratings has affirmed Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘RD’ and Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) at ‘CCC’ amid the country’s continuing debt challenges.
The ‘RD’ rating indicates that Ghana remains in default on its Eurobonds following the expiration of the grace period for a missed coupon payment in February 2023.
Fitch noted significant progress in Ghana’s debt restructuring efforts under the Common Framework, a positive sign for the country’s financial future.
In January 2024, Ghana made significant strides by reaching an agreement on crucial terms with the official bilateral creditor committee.
This agreement, which was formalized in June 2024 with a memorandum of understanding, marks a pivotal point in Ghana’s debt restructuring efforts.
Regarding the restructuring of Eurobonds, Ghana and bondholders represent approximately 40% of the US$3 billion in outstanding Eurobonds, and it reached an agreement in principle in June 2024.
This agreement, which aligns with the IMF’s debt sustainability thresholds and the Common Framework’s comparability of treatment clause, provides a solid foundation for the restructuring process.
The consent solicitation for the bond exchange is set to be launched soon, with the Eurobond exchange expected to be settled by September 2024.
However, it’s important to note that delays are possible due to ongoing negotiations on terms for IDA-partially guaranteed bonds.
Fitch’s expectation that Ghana’s external debt restructuring will be finalized by the end of 2024 provides a clear timeline for stakeholders to plan their financial strategies.
Investors will be offered new bonds in exchange for the 15 outstanding Eurobonds.
The ‘disco’ option will include a nominal haircut of 37% on all claims, including past-due interests.
From 2026 to 2035, the remaining claims will be restructured into bonds, with coupon rates ranging from 0% to 6%.
