Business Maverick: Ghana credit rating cut by Moody’s on debt-restructuring plan

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The country was downgraded deeper into junk territory by Moody’s Investors Service on the likelihood that private creditors will incur steep losses during the government’s planned debt restructuring.

Ghana’s credit rating was slashed by two levels to CA, the second-lowest score at Moody’s, according to a statement on Tuesday. That puts Ghana on par with Sri Lanka, which is in default. The downgrade follows plans in Ghana’s“Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability,” analysts Lucie Villa and Marie Diron wrote in the statement.

At the same time, Ghana’s outlook was changed to stable as the restructuring will likely happen in coordination with creditors and under a program with the International Monetary Fund, according to Moody’s. The nation is expected to ask holders of its international bonds to accept losses of as much as 30% on the principal and forgo some interest payments as it hammers out a debt-sustainability plan to qualify for a loan from the IMF, Deputy Minister of Finance

 

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