Ghana’s Credit Rating Downgraded To Further Junk Status By Moody’s

Ghana’s Credit Rating Downgraded To Further Junk Status By Moody’s

  • Ghana's credit rating has been sunk deeper into junk status to Ca from Caa2 by Moody's
  • The international crediting rating agency explained that Ghana’s high debt burden and the debt structure could result substantial losses for investors
  • Moody's also said it sees debt restructuring as a better alternative to a less orderly form of default that could result in higher losses for creditors

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International credit rating agency Moody's has downgraded Ghana to further junk status.

In the grading that started in September 30, 2022, Moody's also warned investors that they could lose in debts restructuring.

Moody's has downgraded Akufo-Addo led economy to further junk status of Ca
L-R: Nana Akufo-Addo and Moody's office in New York, US.
Source: Getty Images

In the latest review on Ghana, Moody’s downgraded the country's long-term issuer ratings to Ca from Caa2 or further junk status and changed the outlook to stable.

“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022″, a statement published on its website said.

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The rating agency states that because of Ghana’s high debt burden and the debt structure, substantial losses on both categories of debt are very likely.

Moody's says this will help the government to improve debt sustainability.

Touching on the stable outlook, Moody's stated that it balances their assumption that the debt restructuring will happen in coordination with creditors and under the umbrella of a funding program with the IMF.

Moody's sees the restructuring as a better alternative to a less orderly form of default that could result in higher losses for lenders.

World Bank Projects Ghana's Debt To GDP To Hit 104%, Classifies Country As A High Debt Distressed One

Meanwhile, YEN.com.gh has reported in a separate story that the World Bank in October classified Ghana as a high debt distressed country that requires debt restructuring.

The Bretton Woods Institution also projected that the country’s debt to GDP would hit 104% by the end of the year.

This projection of the World Bank was captured in its October 2022 Africa Pulse Report, which indicated that Ghana’s debt is expected to jump significantly.

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Source: YEN.com.gh

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