INTERNATIONAL ratings agency, Fitch Ratings, says Ghana has defaulted in servicing its local debt but has the prospect of recovery.
The agency downgraded the country’s local currency rating to ‘RD’ from ‘CCC’ this week in the latest misfortunes to have hit the troubled economy.
Fitch typically does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below,” the agency said in a statement.
It blamed the downgrade mainly on the government’s inability to make payments on some of the local-currency bonds issued prior to the domestic debt exchange and the lack of certainty on when the payments would resume.
Standards and Poor’s (S&P), another ratings agency had earlier downgraded the local debt to the same status while Moody’s is yet to issue its ratings.
The latest development now makes Ghana second only to Zambia in Africa and fourth in the world with a default creditworthiness.
Fitch said in a statement that it has also downgraded to ‘CC’ from ‘CCC’ and subsequently withdrawn the issue ratings on five local-currency bonds issued prior to the domestic debt exchange.
Explaining the bases for the downgrade, Fitch said the missed payments on some of the local-currency bonds issued prior to the domestic debt exchange could affect one or more of these five previously rated bonds.
These five bonds are ISIN no. GHGGOG044744, GHGGOG066150, GHGGOG043563, GHGGOG065475, GHGGOG044751.
It said although the government announced that it was resuming payments on local-currency bonds issued prior to the domestic debt exchange (the ‘old bonds’) on March 13, 2023 to bondholders who were either ineligible or did not participate in the domestic debt exchange, it failed to honour that commitment.
The authorities have subsequently acknowledged that only the coupon payments on the two-year note that matured on 20 February 2023 and the 20-year note maturing in 2039 had been made. The principal payment on the former note has not been made,” it said.