Fitch downgrades Ghana to deeper junk status; from ‘C’ to ‘Restricted Default’

International credit rating agency, Fitch, has downgraded Ghana further to deeper junk status.

In its latest report on the country’s economic outlook, Fitch further downgraded Ghana’s Long-Term creditworthiness to Restricted Default (RD) from ‘C’.

The issue ratings on local-currency bonds issued domestically have also been downgraded to Default (D) from ‘C’.

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

Restricted Default ratings indicate an issuer that in Fitch’s opinion has experienced an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and has not otherwise ceased operating.

Fitch also attributed the downgrade to the decision by the Akufo-Addo-led government to embark on the debt exchange programme and the recent default on local bonds that matured on February 6, 2023, and another one 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.”