Ghana’s local currency ratings upgraded from Ca to Caa3, stable outlook maintained

Moody’s Investors Service raised Ghana’s long-term issuer rating from Ca to Caa3.

Ghana’s outlook is also stable, according to the rating agency.

Moody’s has also raised the rating of the local currency senior unsecured MTN programme from (P)Ca to (P)Caa3.

This upgrade is due to the completion of the government’s primary local currency debt restructuring, which has reduced future losses on local currency debt.

According to Moody’s, the Caa3 rating still reflects the existing risk of potential default, which remains a tangible concern until Ghana settles its non-restructured local currency debt and restructures its foreign currency debt.

The stable outlook suggests a healthy balance of downside and upside risks. On the one hand, prolonged negotiations over the restructuring of the government’s foreign currency debt, as well as increasing restrictions on access to local currency funding, pose downside risks that could result in a larger loss than indicated by the Caa3 rating in another local currency debt restructuring.

It said there is the possibility of a relatively smooth foreign currency debt restructuring process, coupled with Ghana’s fiscal and external adjustment supported by the official sector, including the IMF. These factors contribute to a balanced outlook.