Fitch – Ghanaian Banks will Deteriorate As A Result of The Restructuring of The Country’s Debt.
When banks replace their current debt with new bonds that have lower coupons and longer tenors, according to Fitch, they will experience significant economic losses.
Despite regulatory forbearance, the two Ghanaian banks that Fitch rates, have sizable capital reserves that should support their ratings during the LC debt exchange. The government announced plans to restructure its external sovereign debt on December 20, 2022, increasing the pressure on banks’ capital.
According to Fitch, this marks the start of a sovereign default process, and as a result, Ghana’s Long-Term Foreign-Currency IDR was downgraded to “C” from “CC”. Fitch rates two banks in Ghana with Nigerian ownership: Guaranty Trust Bank (Ghana) Limited and United Bank for Africa (Ghana) Limited, both of which have a Viability Rating (VR) of and a Long-Term IDR of “B-“/Stable.
