Fitch downgrades Ghana to ‘Restricted Default’ after failing to pay $40.6m coupon

Ratings agency, Fitch, has downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’ after the country missed the grace period to make a coupon payment ($40.6 million) on one of its Eurobonds.

Fitch also downgraded the rating of the country’s $1 billion Eurobond maturing on January 18, 2026 to ‘D’ from ‘C’ and withdrawn its rating.

It affirmed all the long-term senior unsecured foreign-currency-denominated issue ratings at ‘C’ and withdrawn their ratings. It also affirmed the partially-guaranteed $1 billion notes maturing in 2030 at ‘CC’.

Again, “issue ratings for all other long-term senior unsecured foreign-currency (FC)-denominated instruments have been withdrawn as these instruments are no longer considered by Fitch to be relevant to the agency’s coverage given that the sovereign has announced a moratorium on these instruments and they will be included in the common framework external debt restructuring”, it said

Fitch expects all of these remaining instruments to default in due course, either as the sovereign misses debt service payments or as an agreement is reached on restructuring the bonds.

Ghana on Friday missed making the $40.6 million coupon payment on its $1 billion 2026 Eurobond, as part of the suspension of payments on selected external debt that the government announced in December, Fitch said.

Fitch typically does not assign Outlooks to sovereigns with a rating of ‘CCC ’ or below.

It attributed the downgrade to the decision by government to embark on the debt exchange programme and the recent default on local bonds that matured on February 6, 2023 and another one which is due for payment this week.

“The downgrade of Ghana’s local-currency denominated debt follows the completion of a domestic debt exchange offer by the Republic of Ghana. This transaction is an element of the recovery programme for which the government is seeking the support of the International Monetary Fund for a 3-year Extended Credit Facility (ECF) of about $3 billion”.

The rating agency, recently, downgraded Ghana’s creditworthiness to junk status.

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