“Fitch to Award Positive Rating to Ghana Following Successful Bond Restructuring”

Fitch, the UK-based rating agency, has indicated its intention to grant Ghana a positive rating once the nation reestablishes relations with a significant majority of non-tendered securities bondholders and successfully restructures local-currency bonds held by pension funds. The Long-Term Local-Currency IDR rating assigned by Fitch will be contingent on Ghana’s commitment and capability to fulfill its local-currency debt obligations in the future.

Fitch mentioned that Ghana’s Long-Term Foreign-Currency IDR rating will also be determined based on the country’s agreement with private creditors regarding the restructuring of its foreign-currency-denominated debt, following the Common Framework official creditors’ claims treatment. This rating will also consider Ghana’s willingness and capacity to meet its foreign-currency debt commitments.

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

Fitch uses its Sovereign Rating Model (SRM) to assess Ghana’s rating, which currently stands at ‘CCC+’ on the Long-Term Foreign-Currency IDR scale. The current ratings are without the SRM and Qualitative Overlay (QO) explanations, as Fitch’s sovereign rating committee adheres to specific rating definitions for scores ‘CCC+’ and below.

The SRM model considers 18 variables over a three-year period, including one year of projections, to generate a score corresponding to the Long-Term Foreign-Currency IDR rating.

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