Exclusive: Ghana deal with Afreximbank gets official creditor backing, source says
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Ghana’s deal on its $750 million loan with Afreximbank has received official creditor backing, a source told Reuters, signalling progress on one of the last major hurdles in Ghana’s broader effort to exit debt default.
A source familiar with the Paris Club’s thinking said Ghana’s agreement with Afreximbank was “welcome” from the group’s perspective, after creditors had indicated that the Afreximbank loan would need to be restructured for their sign-off. Ghana announced the deal on Christmas Day but has not publicly released terms, and it did not immediately comment on the Paris Club view.
The development closes Ghana’s last major restructuring hurdle, but raises questions about Afreximbank’s credit profile and its long-standing assertions that preferred creditor status would shield it from taking losses on loans. Afreximbank referred Reuters to earlier comments saying it had resolved the “issues” around the loan to the satisfaction of both parties, without saying whether it accepted losses.
For the Paris Club to welcome the deal, it would need to meet “comparability of treatment” parameters, which could have been achieved via a principal haircut, maturity extension, lower interest rate, or a combination. Market attention has focused on whether any restructuring terms could prompt ratings agencies to reassess Afreximbank’s rating and increase its funding costs.
The dispute has also played into a broader debate about “baby multilaterals”, with creditors viewing some loans from Afreximbank and the Trade and Development Bank (TDB) as commercial and therefore subject to restructuring. Afreximbank said on Friday it was terminating its relationship with Fitch after a dispute tied to ratings actions and concerns that preferred creditor status could weaken.
U.S. investment bank JPMorgan cut its view on Afreximbank bonds over concerns the lender’s credit rating could be cut further following reports it would take a loss on Ghana’s loans, while Moody’s has said any losses would be partly mitigated by prior provisioning.
