According to S&P in a statement, Ghana's proposed local debt swap is a "distressed exchange offer," earning those bonds the "selective default" rating, while the foreign currency bonds downgrade responds to the government's announced plans to restructure that debt.
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S&P downgrades Ghana's credit ratings from CCC+ to CC
Standard and Poor's (S&P) Global Ratings, an American credit rating agency, has pushed Ghana's debt further into speculative territory, lowering its foreign and local currency sovereign ratings to CC from CCC+/C.
Ken Ofori-Atta
Earlier, the international credit rating agency, Moody's downgraded Ghana from Caa2 to Ca.
It also downgraded the country deeper into junk territory on the likelihood that private creditors will incur steep losses during the government's planned debt restructuring.
The country's downgrade is the second-lowest score at Moody's.
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The rating agency in a statement issued on Tuesday, November 29, 2022, follows plans in the proposed 2023 budget presented by Finance Minister Ken Ofori-Atta to restructure both local and foreign debts.
"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," it said.
"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," it added.
It explained that the stable outlook balances Moody's assumption that the debt restructuring will happen in coordination with creditors and under the umbrella of a funding program with the IMF against the potential for a less orderly form of default that could result in higher losses for private-sector creditors.
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