We will assign Ghana positive rating once local-currency bonds held by pension funds are restructured – Fitch

Ratings agency, Fitch, has indicated it will assign Ghana a positive rating once the country normalises 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, it will assign Ghana’s LTLC IDR based on a forward-looking assessment of its willingness and capacity to honour its local-currency debt.

“Once Fitch judges Ghana has normalised relations with a significant majority of non-tendered securities bondholders and completes the restructuring of local-currency bonds hold by pension funds, the agency will assign Ghana’s LTLC IDR based on a forward-looking assessment of its willingness and capacity to honour its local-currency debt”.

Additionally, it said “once Ghana reaches an agreement with private creditors on the restructuring of its foreign-currency-denominated debt and completes that restructuring process following the Common Framework official creditors’ claims treatment, Fitch will assign a LTFC IDR based on a forward-looking assessment of its willingness and capacity to honour its foreign-currency debt”.

It however said that it would downgrade Ghana in the event of increased risk that Ghana fails to honour the first coupon payments on these bonds due in August 2023.

“The issue-ratings on denominated bonds issued on the completion date of the domestic debt exchange would be downgraded in the event of increased risk that Ghana fails to honour the first coupon payments on these bonds due in August 2023”.

Fitch’s proprietary Sovereign Rating Model (SRM) assigns Ghana a score equivalent to a rating of ‘CCC+’ on the Long-Term Foreign-Currency IDR scale.

However, in accordance with its rating criteria, Fitch’s sovereign rating committee has not utilised the SRM and Qualitative Overlay (QO) to explain the ratings in this instance. Ratings of ‘CCC+’ and below are instead guided by the rating definitions.

Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR.