The Government of Ghana’s long-term issuer rating in local currency has been upgraded by Moody’s Investors Service (Moody’s) to Caa3 from Ca, with a stable outlook intact.
The senior unsecured MTN program rating in local currency has also been improved by Moody’s from (P)Ca to (P)Caa3.
Moody’s assessment of future projected losses on local currency debt has decreased since the government’s primary local currency debt restructuring was finished.
Ghana has experienced some budgetary relief as a result of this transaction, and given the harm to its financial system, it is unlikely to request and obtain another debt restructuring of a comparable size from the same creditors in the near to medium term.
Additionally, with the IMF’s first payment under its arrangement with the government, official sector help has begun.
The Caa3 grade, however, recognizes a high redefault risk that won’t go away until both the foreign currency debt and the unpaid local currency debt of Ghana are addressed.
The balanced downside and upside risks are reflected in the stable outlook. One downside risk that could result in another local currency debt restructuring with greater losses than the Caa3 rating is a protracted period of negotiations over the restructuring of the government’s foreign currency debt and tightening restrictions on access to local currency funding.
On the other hand, the restructuring of the foreign currency debt may progress quite smoothly, and Ghana’s fiscal and external adjustment may be supported by the official sector, including the IMF.
Both the senior unsecured rating and the foreign currency long-term issuer rating are Ca. The ratings for senior unsecured MTNs issued in foreign currencies are (P)Ca and (P)Ca3, respectively.
The country ceilings for Ghana’s local currency (LC) and foreign currency (FC) have also been revised up by one notch by Moody’s, from Caa1 and Caa2 to B3 and Caa1, respectively, mirroring the upgrade of the sovereign local currency ratings by one notch.