We will give Ghana positive rating after successful bond restructuring - Fitch

Rating agency Fitch has signalled its intention to bestow a positive rating upon Ghana once the nation restores relations with a significant majority of non-tendered securities bondholders and successfully restructures local-currency bonds held by pension funds.

The UK-based firm emphasised that the assignment of Ghana's LTLC IDR rating will be contingent on a forward-looking evaluation of the country's commitment and ability to meet its local-currency debt obligations.

"Once Fitch judges Ghana has normalised relations with a significant majority of non-tendered securities bondholders and completes the restructuring of local-currency bonds held by pension funds, the agency will assign Ghana’s LTLC IDR based on a forward-looking assessment of its willingness and capacity to honour its local-currency debt", Fitch said.

It added that "once Ghana reaches an agreement with private creditors on the restructuring of its foreign-currency-denominated debt and completes that restructuring process following the Common Framework official creditors’ claims treatment, Fitch will assign an LTFC IDR based on a forward-looking assessment of its willingness and capacity to honour its foreign-currency debt".

This, too, will be determined based on an assessment of Ghana's willingness and capability to fulfil its foreign-currency debt commitments.

The agency cautioned that a downgrade for Ghana could transpire if there is an elevated risk of the country failing to make its first coupon payments on the bonds scheduled for August 2023.

Fitch employs its proprietary Sovereign Rating Model (SRM), which rates Ghana akin to 'CCC+' on the Long-Term Foreign-Currency IDR scale.

It is important to note that the current ratings are not accompanied by the SRM and Qualitative Overlay (QO) explanations, as Fitch's sovereign rating committee has chosen to adhere to the rating definitions for scores 'CCC+' and below.

The SRM model developed by Fitch employs a comprehensive approach, factoring in 18 variables over three years, including one year of projections.

This methodology generates a score that corresponds to the LT FC IDR rating.