S&P Global has downgraded Ghana’s long-term local currency bonds to “selective default”.Per the statement from the American credit rating agency, Ghana’s foreign currency debt has been cut from “CCC-plus” to “CC” with default a “virtual certainty”.

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“S&P said Ghana’s proposed local debt swap is a “distressed exchange offer,” earning those bonds the “selective default” rating, while the foreign currency bonds downgrade responds to the government’s announced plans to restructure that debt,” the report said on December 6, 2022.The downgrade is due to government's debt exchange programme announced on December 5, 2022, by the government.

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The government has made an invitation to “holders of domestic debt to voluntarily exchange approximately GH¢137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.”The move has been regarded as a clear admission of probable default on its bonds.

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S&P DOWNGRADEs GHANA TO SD ( selective default) from CCC+, REFLECTING GHANA's RECENT ANNOUNCEMENTS OF DOMESTIC BOND DEFAULT.WE ARE IN FOR A LONG HAUL! pic.twitter.com/6ATqV7StTq— Cassiel Ato Forson(PhD) (@Cassielforson) December 7, 2022This comes after Ghana’s second biggest bank, GCB Bank, was downgraded by international rating agency, Moody’s.

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GCB Bank’s long-term local currency deposit rating was downgraded to Caa3 from Caa2 and is one notch higher than the bank’s Ca long-term foreign currency deposit rating.Again, its  long-term foreign currency deposit ratings have also been downgraded from Ca to Caa2, its long-term Counterparty Risk Ratings (CRRs) to Caa3 from Caa2 and its long-term Counterparty Risk Assessment (CR Assessment) to Caa3(cr) from Caa2(cr).

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The rating follows Moody’s action on December 2, 2022, to downgrade Ghana’s long-term issuer and senior unsecured debt ratings from Ca to Caa2 and place them on review for downgrade on November 29, 2022.This is the second time in two years that Moody’s has downgraded the indigenous bank.

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