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Moody’s
Ratings
has
indicated
possibility
of
upgrading
Ghana’s
credit
rating
after
the
country
Eurobonds
exchange.
In
a
note,
the
global
rating
agency
gave
hint
that
it
has
completed
a
periodic
review
of
the
ratings
of
Ghana
and
other
ratings
that
are
associated
with
this
issuer.
Ghana’s
ratings,
which
includes
its
long-term
issuer
ratings
of
Caa3
for
local
currency
and
Ca
for
foreign
currency,
reflect
the
government’s
ongoing
restructuring
of
debt
under
the
G20
common
framework
started
in
December
2022.
According
to
Moody’s,
local
currency
debt,
excluding
Treasury
Bills,
was
restructured
in
2023.
The
restructuring
of
foreign
currency
debt,
which
accounts
for
nearly
half
of
the
debt,
has
progressed
after
successive
announcements
in
June
2024
of
a
Memorandum
of
Understanding
on
official
sector
debt
and
an
agreement
in
principle
with
bondholders.
Upon
completion
of
the
restructuring,
it
is
likely
that
all
ratings
will
be
aligned
at
a
higher
level,
albeit
in
the
Caa-rating
category
given
the
liquidity
constraints
that
typically
follow
an
event
of
default,
Moody’s
stated.
“While
the
IMF
programme
supports
fiscal
consolidation
and
funding
access
due
to
Ghana’s
relatively
robust
institutional
capacity,
which
allows
it
to
comply
with
programme
conditionality,
still-high
inflation
and
tight
monetary
conditions
will
remain
key
credit
challenges,”
Moody’s
said
in
a
statement.
The
Ministry
of
Finance
announced
an
agreement
in
principle
with
bondholders’
representatives
on
the
terms
for
restructuring
$13.1
billion
of
Eurobond
debt
on
24
June
2024.
The
amount
accounted
for
21%
of
2023
total
debt
owed
by
Ghana.
Under
the
agreement,
bondholders
would
forego
around
$4.7
billion
in
principal
with
no
state
contingent
triggers.
In
a
press
release
issued
on
28
June
2024,
the
IMF
confirmed
that
both
restructurings
are
consistent
with
the
parameters
of
its
programme.
However,
the
OCC
has
yet
to
confirm
that
the
agreement
on
principle
with
bondholders
is
comparable
in
debt
treatment
to
the
MoU.
Moody’s
said
Ghana’s
‘ba2’
economic
strength
assessment
balances
the
country’s
growth
potential
in
the
oil
and
non-oil
sectors
against
its
small
size
and
low
wealth
levels.
Its
‘caa2’
institutions
and
governance
strength
primarily
reflects
very
weak
fiscal
and
monetary
policy
effectiveness,
which
have
ultimately
led
to
unsustainable
government
debt
and
the
government
resorting
to
a
debt
restructuring,
the
reviewed
note
added.
Ghana’s
fiscal
strength
is
assessed
at
‘ca’,
reflecting
very
weak
debt
affordability
and
a
very
high
debt
burden,
even
though
the
ongoing
debt
restructuring
will
improve
these
metrics.
Also,
Moody’s
said
Ghana’s
susceptibility
to
event
risk
at
‘ca’
is
driven
by
elevated
government
liquidity
risk
due
to
high
government
gross
borrowing
requirements
and
very
limited
borrowing
options.
The
outlook
is
stable
and
reflects
the
ongoing
foreign
currency
debt
restructuring,
with
losses
for
bondholders
very
likely
to
remain
in
line
with
the
loss
given
default
range
associated
with
our
current
ratings.
Moody’s
hint
that
a
rating
downgrade
is
unlikely
given
the
recent
progress
on
the
foreign
currency
debt
restructuring
and
the
terms
of
the
agreement
in
principle
with
bondholders,
which
are
consistent
with
our
ratings.
However,
in
the
unlikely
event
that
the
agreement
does
not
proceed,
derailing
the
debt
restructuring
process,
downward
pressure
on
both
local
currency
and
foreign
currency
ratings
may
develop.
“We
will
very
likely
upgrade
the
local
currency
and
foreign
currency
ratings
after
the
exchange
of
the
Eurobonds”,
the
global
rating
agency
said.
It
added
that
the
terms
of
the
agreement
reached
in
principle
on
24
June
already
provide
material
debt
relief
to
the
government;
this
relief
comes
on
top
of
that
gained
via
the
local
currency
debt
restructuring
that
took
place
earlier
in
the
process.
The
restructuring
of
official
sector
debt
will
bring
additional,
as-yet
unknown,
liquidity
relief.
As
mentioned
above,
post
debt
restructuring,
Ghana’s
ratings
are
likely
to
be
higher,
albeit
still
reflecting
liquidity
constraints,
Moody’s
said. Bitcoin
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