S&P Global has downgraded Ghana’s long-term local currency bonds to “selective default” and cut the country’s foreign currency debt to “CC” from “CCC-plus,” with default a “virtual certainty,” the rating agency said in a statement on Tuesday.
S&P said Ghana’s proposed local debt swap is a “distressed exchange offer,” earning those bonds the “selective default” rating, while the foreign currency bonds downgrade responds to the government’s announced plans to restructure that debt.
Ghana’s Parliament on Tuesday narrowly approved the proposed 2023 budget, overcoming resistance from opposition lawmakers over the inclusion of the debt exchange and a higher value-added tax.
The S&P downgrade comes after a recent downgrade deeper into junk territory by Moody’s Investors Service on the likelihood that private creditors will incur steep losses during the government’s planned debt restructuring.