By: Kekeli K. Blamey
Fitch Ratings has announced 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 restructuring its foreign currency-denominated external debt and completes the restructuring process. This assessment will be based on a forward-looking evaluation of Ghana’s willingness and capacity to honor its foreign-currency debt.
Recently, Fitch affirmed Ghana at ‘Restrictive Default’. The agency indicated that the LTLC IDR would be upgraded upon reduced liquidity pressures, potentially following the completion of the external debt treatment. 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, according to its rating criteria, Fitch’s sovereign rating committee has not utilized the SRM and Qualitative Overlay to explain the ratings.
Country Ceiling
Fitch has assigned Ghana a Country Ceiling of ‘B-‘. For sovereigns rated ‘CCC+’ and below, Fitch starts with a baseline of ‘CCC+’ for determining the Country Ceiling. The 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 ‘B-‘ Country Ceiling reflects that the private sector in Ghana 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.
