Accra - Ghana’s dollar bonds fell, pushing yields higher, after Standard & Poor’s cut its credit rating to among the lowest in Africa as the country continues talks with the International Monetary Fund for a bailout.
Yields on $1 billion (R11 billion) of debt due August 2023 rose a third day, increasing 13 basis points to 7.84 percent by 11:08 am in the capital, Accra.
That’s the biggest advance on a closing basis since October 15.
The difference between Ghana’s securities sold last month due January 2026 and similarly dated Treasuries widened to 579 basis points.
S&P lowered Ghana’s rating to B-, six levels below investment grade, it said October 24.
That places the West African nation on par with Democratic Republic of Congo and Egypt in sharing S&P’s lowest creditworthiness in Africa, according to data compiled by Bloomberg.
Ghana is in talks with the IMF for a three-year program that could give the world’s second-biggest cocoa producer $800 million balance of payment support, according to Finance Minister Seth Terkper.
“S&P shares our scepticism over whether the government would be able to credibly implement reform even if a financial aid deal were sealed in coming months,” Johannesburg-based ETM Analytics Africa Analyst Gareth Brickman and Junior Analyst Catherine Bennett said in an e-mailed note to clients today.
Moody’s Investors Service and Fitch Ratings rate Ghana five steps below investment grade.
S&P’s decision to downgrade “reflects the present situation of the economy,” Terkper said by phone on October 24.
“We are optimistic about the medium-term prospects. We’ll regain our rating.” - Bloomberg News