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Bond Market News

Ghana Downgraded to Caa1 by Moody’s

Ghana was downgraded to Caa1 from B3 by Moody’s, while the outlook was changed to stable from negative. The downgrade reflects the increasingly difficult task the government faces in addressing its “intertwined liquidity and debt challenges”, said the rating agency. Weak revenue generation and tight funding conditions have impacted the sovereign’s financial flexibility with Moody’s estimating that interest payments alone will absorb more than 50% the government’s revenue over the foreseeable future. Although the government has adopted a fiscal consolidation strategy, it comes with sizeable implementation risks.

Ghana shot back at the Moody’s downgrade saying it was ‘gravely concerned’ and that the rating agency left out key data. As per Bloomberg, Ghana’s finance ministry said “key material information from the assumptions driving some of Moody’s forecasts and projections such as the 2022 budget expenditure control measures, 2022 upfront fiscal adjustments and inaccurate balance of payment statistics” had been omitted. It added that the downgrade was an institutionalized bias against African economies.

Ghana’s dollar bonds were lower with its 7.875% 2027s down 1.8 points to 83.05, yielding 12.44%.

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