Fitch assigns Ghana’s new dollar bonds at CCC+
Fitch Ratings has assigned Ghana’s new US dollar bonds, issued on October 9, 2024, a ‘CCC+’ rating.
Fitch also has upgraded Ghana’s Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’.
Fitch has affirmed Ghana’s Long-Term Foreign-Currency (LTFC) IDR at ‘RD’. Fitch typically does not assign Outlooks to IDRs of sovereigns with a rating of ‘CCC+’ or below.
Fitch has also affirmed the ‘CC’ rating on Ghana’s US dollar-denominated notes partially guaranteed by the International Development Association (IDA), part of the World Bank Group, due October 2030, and subsequently withdrawn the rating.
The issue rating for the IDA-partially guaranteed note maturing in 2030 has been withdrawn as the note will no longer exist because of its restructuring.
Eurobond Exchange Concluded
Ghana has successfully concluded a debt exchange for its 15 outstanding non-performing Eurobonds, including the IDA-partially guaranteed notes. This follows consent reached on 98.58% of the total outstanding amount, and each series has received consent representing more than 92% of outstanding principal, meeting the respective collective action clause thresholds.
As a result, the 15 Eurobonds have been exchanged for five new bonds and distribution to eligible holders was completed on 10 October 2024. The assignment of a ‘CCC+’ rating to these five bonds reflects our assessment of Ghana’s expected credit profile after completion of the whole debt restructuring, with a declining debt supported by ongoing fiscal consolidation, and elevated liquidity risks with interest spending relative to revenue which is still high.
Significant Reduction in Terms
In exchange for the 15 outstanding Eurobonds with a total face value of USD13.1 billion, investors were offered a set of new bonds, with two options. Under the ‘disco’ option, a nominal haircut of 37% applies on all claims, which then is restructured into two new notes – a step-up coupon amortising note due 2029 and a step-up coupon amortising note due 2035. The step-up coupon rates range from 5% to 6%. Under the ‘par’ option there is no nominal haircut but claims are restructured to a 1.5% amortising note due 2037. Both the ‘disco’ option and ‘par’ option receive a zero-coupon amortising note due 2026 and a zero-coupon note due 2030 in exchange of past-due interests. The restructuring does not provide for value-recovery instruments. Tenders representing a total of USD994.8 million opted for the par option (below the cap of USD1.6 billion).
