We’ll upgrade Ghana’s rating once it reaches agreement with private creditors – Fitch

Rating agency, Fitch, has stated that it will assign a Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to Ghana once the country reaches an agreement with private creditors on the restructuring of its Foreign Currency – denominated external debt and completes that restructuring process.

This it added will be based on a forward-looking assessment of its willingness and capacity to honour its foreign-currency debt.

Fitch which recently affirmed Ghana at ‘Restrictive Default’ said the LTLC IDR would be upgraded on reduced liquidity pressures, potentially following the completion of the external debt treatment.

For example, restoring macroeconomic stability would significantly lower debt interest costs.

Fitch’s proprietary Sovereign Rating Model assigns Ghana a score equivalent to a rating of ‘B-‘ on the Long-Term Foreign-Currency IDR scale.

However, per its rating criteria, Fitch’s sovereign rating committee has not utilised the SRM and Qualitative Overlay to explain the ratings.

Country Ceiling

The Country Ceiling for Ghana is ‘B-‘.

For sovereigns rated ‘CCC+’ and below, Fitch assumes a starting point of ‘CCC+’ for determining the Country Ceiling.

Fitch’s Country Ceiling Model produced a starting point uplift of +0 notch above the IDR. Fitch’s rating committee applied a +1-notch qualitative adjustment to the model result under the Balance of Payments Restrictions pillar.

The Country Ceiling of ‘B-‘ reflects that the private sector has not been prevented or significantly impeded from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.