Ghana Yields Rise After S&P Downgrade to Among Lowest in Africa

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 of debt due August 2023 rose a third day, increasing 13 basis points to 7.84 percent by 11:08 a.m. in the capital, Accra. That’s the biggest advance on a closing basis since Oct. 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 Oct. 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 skepticism 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 Ltd. 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 Oct. 24. “We are optimistic about the medium-term prospects. We’ll regain our rating.”

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