Ghana Cut to Default by S&P on Eurobond Payment Suspension

Ghana was cut to default by S&P Global Ratings after the government suspended debt payments, a move that complicates the planned debt restructuring meant to unlock a bailout by the International Monetary Fund, Bloomberg News reported. The West African nation, which has $13 billion of foreign bonds, was downgraded to selective default from CC due to the moratorium on debt payments, the credit assessor said in a Tuesday statement. The default comes as Ghana suffers from “very low net reserves, a volatile exchange rate, high inflation and the weakened economy,” according to analysts Frank Gill and Ravi Bhatia. Fitch Ratings downgraded the foreign debt score by a notch to C on Wednesday. “These factors have all limited the sovereign’s capacity to refinance its maturing debt,” the S&P analysts wrote. “We could raise the long-term ratings following the presentation of restructurings and their acceptance by creditors.” Ghana caught investors by surprise earlier this week by announcing it would cease payments on its foreign bonds, commercial loans and most bilateral obligations pending an agreement with creditors. While plans for a broad restructuring of foreign and local debt had already been signaled, some expected the government to keep making payments in the interim. Read more.