Fitch Ratings has affirmed Ghana's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at Restrictive Default or 'RD' and Ghana's Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) at 'RD'.

Fitch, downgraded Ghana's LTFC IDR to 'RD' from 'C' on February 21, 2023, following the expiration of the grace period for a missed Eurobond coupon payment.

According to the rating agency, Ghana has since made progress with official creditors for a restructuring of its external debt under the G20 Common Framework.

It said authorities are looking to restructure $20 billion of external debt, including official bilateral debt, export credit agencies-backed commercial loans, Eurobonds and non-insured commercial loans.

Ghana to reach agreement with Official Creditor Committee by end -2023

It continued that financing assurances have been provided by the official creditor committee (OCC) at its first meeting on May 12, 2023, unlocking IMF board approval for a $3 billion three-year Extended Credit Facility.

Fitch therefore expects the OCC to reach an agreement with authorities by end-2023 and a treatment of private creditors' claims on comparable terms by mid-2024. The IMF estimates the financing from external debt restructuring must amount to $10.5 billion in 2023-2026.

Fitch downgraded Ghana's LTLC IDR to 'RD' from 'CCC' on April 21, 2023, following missed payments on some local-currency-denominated bonds that were not tendered or that were held by entities not eligible for participating in the domestic debt exchange programme (DDEP) that was completed on February 24, 2023 (the 'old bonds').

Although authorities made some progress on resuming payments, particularly to individual bondholders, the rating agency, said, some payments are still missing to some institutional investors. The authorities have not yet announced when they intend to resume payments on these remaining 'old bond' obligations.

Debt restructuring of LC to be completed by September 2023

The Ghana Government have announced they are seeking a debt restructuring of local currency (LC) bonds held by pension funds, which were not eligible to participate in the previous DDEP, reportedly offering extension of maturities in exchange of higher coupon payments.

Fitch said it expects this restructuring to be completed by autumn 2023.