Bonds issued in foreign currencies – Eurobonds – by Ghana has been rated ‘B’ with a stable outlook by international credit rating agency, Fitch Ratings.
The rating comes on the back of Ghana’s $5 billion Eurobond issuance for which the roadshow to the issuance ends on Friday, March 26, with funds expected to trickle in coming next week.
According to Fitch, the USD bond rating is in line with Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) which was affirmed at ‘B’ with a Stable Outlook on October 15, 2020.
Adding the bond’s rating is sensitive to changes in Ghana’s Long-Term Foreign-Currency IDR.
With a ‘B’ rating, Fitch implies that Ghana’s USD bonds are non-investment-grade bonds which slightly presents more risk compared to investment-grade bonds rated ‘AAA’ to ‘BBB’.
According to Fitch Ratings, the main factors that could, individually or collectively, lead to positive rating action/upgrade are:
– Public Finances: Greater confidence in the government’s ability to move public debt/GDP onto a downward path, for example, through the implementation of a credible post-pandemic fiscal consolidation strategy.
– External Finances: An improvement in Ghana’s external liquidity, such as an increase in international reserves occurring through non-debt-creating flows.
The main factors that could, individually or collectively, lead to negative rating action/downgrade:
– Public Finances: Expectations of a persistent rise in the medium-term public debt trajectory resulting, for example, from a lack of a credible consolidation strategy following the 2020 election.
– External Finances: A decline in international reserves, for example, as a result of a prolonged lack of access to international capital markets.
– Macro: A deeper near-term macroeconomic shock or a sustained increase in macroeconomic instability, for example, due to subsequent waves of pandemic-related measures and/or prolonged fiscal slippage.
