Ghana was downgraded to CC from CCC by Fitch due to an “increased likelihood that Ghana will pursue a debt restructuring”. Ghana is currently negotiating an IMF support program and Fitch believes the nation will require some debt treatment due to rising interest costs (47.5% of revenue in 2021) and low revenue-to-GDP. Ghana is reorganizing part of its $19bn local debt in order to secure a $3bn IMF loan. The African nation is also facing limited access to external financing and is set to see $3bn in external debt service costs in 2023. Also, its official reserve assets are down to $7.3bn in June from $9.8bn in 2021. Given its weak state of finances, the currency, the Cedi is down 40% YTD against the US dollar.

Ghana’s dollar bonds were ~3% higher despite the downgrade on Friday – its 8.125% 2032s were up 1.5 points to 40.75, yielding 24.4%.

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