Moody’s Cautions Ghana over $4.5bn Bond Repayment

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Moody’s has warned that Ghana faces a severe risk of financing stress as a number of sovereign bonds issued by the government in the past few years reach their maturity in the early 2020s.

The credit ratings firm in its report issued this week noted Ghana faces principal payment worth $1.75 billion between 2020 and 2023, and $2.75 billion through 2026 on the four Eurobonds issued between 2013-2016.

The report said Ghana, like many sub-Saharan African countries that took advantage of relatively cheaper rates and longer maturities on these sovereign bonds relative to domestic bonds, lack the institutional capacity to manage financial emergencies.

Moody’s said the peak in sovereign bond issuance in 2014 coincided with a deterioration in credit quality. The growth outlook for the region dimmed due to a combination of weaker Chinese growth and lower commodity prices.

The latter reason, the agency said, also hit government revenue and export receipts and contributed to a worsening of fiscal and current account positions, while currency depreciation increased the cost of servicing foreign-currency denominated debt.

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