\n
Moody\u2019s has announced its intention to upgrade Ghana\u2019s credit rating following the country\u2019s recent Eurobond exchange. The New York-based ratings agency has conducted a periodic review of Ghana\u2019s ratings, which currently stand at Caa3 for local currency and Ca for foreign currency. These ratings reflect the government\u2019s ongoing debt restructuring efforts under the G20 common framework, initiated in December 2022.<\/strong><\/p>\nThe restructuring of local currency debt, excluding Treasury Bills, was completed in 2023. Regarding foreign currency debt, which constitutes nearly half of Ghana\u2019s total debt, significant progress has been made. Announcements in June 2024 highlighted a Memorandum of Understanding (MoU) on official sector debt and an agreement in principle with bondholders.<\/p>\n
Potential for Higher Ratings<\/strong><\/p>\nMoody\u2019s stated that once the restructuring is complete, all ratings are likely to be aligned at a higher level, though still within the Caa-rating category due to liquidity constraints typically following a default event. The IMF program supports fiscal consolidation and funding access, benefiting from Ghana\u2019s relatively robust institutional capacity. However, high inflation and tight monetary conditions remain key credit challenges.<\/p>\n
On June 24, 2024, Ghana\u2019s Ministry of Finance announced an agreement in principle with bondholders to restructure $13.1 billion of Eurobond debt, which accounted for 21% of Ghana\u2019s total debt in 2023. Under this agreement, bondholders would forgo around $4.7 billion in principal without state-contingent triggers. This followed a June 12 MoU between the Finance Ministry and the Official Creditor Committee (OCC) to restructure $5.4 billion of official sector external debt. The IMF confirmed on June 28 that both restructurings are consistent with its program parameters, though the OCC has yet to confirm that the bondholder agreement is comparable in debt treatment to the MoU.<\/p>\n
Fiscal Strenght<\/strong><\/p>\nMoody\u2019s assesses Ghana\u2019s economic strength at \u2018ba2\u2019, balancing the country\u2019s growth potential in the oil and non-oil sectors against its small size and low wealth levels. The \u2018caa2\u2019 rating for institutions and governance strength reflects very weak fiscal and monetary policy effectiveness, which led to unsustainable government debt and the need for restructuring.<\/p>\n
Ghana\u2019s fiscal strength is rated \u2018ca\u2019, indicating very weak debt affordability and a very high debt burden. The ongoing debt restructuring is expected to improve these metrics. Moody\u2019s also highlighted Ghana\u2019s susceptibility to event risk at \u2018ca\u2019, driven by elevated government liquidity risk due to high gross borrowing requirements and limited borrowing options.<\/p>\n
Stable Outlook<\/strong><\/p>\nThe outlook for Ghana remains stable, reflecting the ongoing foreign currency debt restructuring. Expected losses for bondholders align with the current ratings\u2019 loss-given-default range. Moody\u2019s indicated that a rating downgrade is unlikely, given the recent progress on foreign currency debt restructuring and the agreement\u2019s terms with bondholders.<\/p>\n
However, if the agreement does not proceed, it could derail the debt restructuring process, potentially leading to downward pressure on both local and foreign currency ratings. Moody\u2019s emphasized that they will likely upgrade the local and foreign currency ratings following the exchange of the Eurobonds.<\/p>\n
The June 24 agreement provides substantial debt relief to the government, complementing earlier local currency debt restructuring. The restructuring of official sector debt will bring additional, yet unknown, liquidity relief. Post-restructuring, Ghana\u2019s ratings are likely to be higher, though still reflecting liquidity constraints.<\/p>\n
classfmonline.com <\/p>\n
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Moody\u2019s has announced its intention to upgrade Ghana\u2019s credit rating following the country\u2019s recent Eurobond exchange. The New York-based ratings agency has conducted a periodic review of Ghana\u2019s ratings, which currently stand at Caa3 for local currency and Ca for foreign currency. These ratings reflect the government\u2019s ongoing debt restructuring efforts under the G20 common […]<\/p>\n","protected":false},"author":1,"featured_media":198397,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-198396","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n
Moody\u2019s poised to upgrade Ghana\u2019s credit rating after Eurobond exchange \u2013 - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2024\/07\/10\/moodys-poised-to-upgrade-ghanas-credit-rating-after-eurobond-exchange\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Moody\u2019s poised to upgrade Ghana\u2019s credit rating after Eurobond exchange \u2013 - Ghanamma.com\" \/>\n<meta property=\"og:description\" content=\"Moody\u2019s has announced its intention to upgrade Ghana\u2019s credit rating following the country\u2019s recent Eurobond exchange. The New York-based ratings agency has conducted a periodic review of Ghana\u2019s ratings, which currently stand at Caa3 for local currency and Ca for foreign currency. 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