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Ghana’s government has taken aim at how international markets price African sovereign debt, arguing that the continent’s bonds are systematically undervalued relative to their underlying fundamentals — a position the country is advancing alongside an ambition to achieve investment-grade credit status.
The West African nation, which completed a landmark debt restructuring in 2024 after defaulting on its external obligations in late 2022, is now making the case that African sovereigns are penalised by risk perceptions that do not accurately reflect economic realities on the ground.
The argument places Ghana among a growing number of African finance ministries pushing back against the premium borrowing costs that have made international capital markets increasingly inaccessible for the continent’s governments. Elevated spreads — the additional yield investors demand above a benchmark rate such as US Treasuries — have driven up debt servicing costs across sub-Saharan Africa, crowding out spending on infrastructure and social programmes.
Ghana’s position is that this pricing dynamic is not purely a reflection of credit risk, but rather a structural mispricing that disadvantages African issuers regardless of their fiscal trajectory or reform progress.
The investment-grade target represents a significant climb for Ghana, which currently carries sub-investment-grade, or speculative, ratings from the major credit rating agencies following its default and restructuring. Investment-grade status — broadly defined as a rating of BBB- or above from Standard and Poor’s and Fitch, or Baa3 and above from Moody’s — would substantially lower the country’s cost of borrowing and reopen access to a wider pool of institutional investors whose mandates restrict holdings of lower-rated debt.
Achieving that status would require sustained fiscal consolidation, a credible debt trajectory, and demonstrated macroeconomic stability — conditions Ghana is working to establish under its ongoing programme with the International Monetary Fund (IMF), which approved a $3 billion extended credit facility for the country in 2023.
The mispricing argument also carries weight in a broader continental conversation. African governments and development finance advocates have long contended that risk models applied to African debt over-rely on historical default data and sovereign rating methodologies that fail to capture improvements in governance, revenue mobilisation, and economic diversification. The African Union and various multilateral institutions have called for reforms to how credit rating agencies assess African sovereigns.
For international investors, Ghana’s framing presents both a challenge and an opportunity. If the mispricing thesis holds, there is alpha — excess return — available in African debt for investors willing to conduct deeper fundamental analysis rather than relying on ratings alone. Several frontier and emerging market fund managers have made precisely this argument in recent years, pointing to relatively high yields against what they describe as manageable underlying risk.
Ghana’s push comes at a moment when a handful of African sovereigns are returning to the Eurobond market after a prolonged period of exclusion driven by global interest rate rises and risk-off sentiment. Côte d’Ivoire, Benin, and Kenya have all issued international bonds in the past year, signalling a cautious reopening — though spreads remain wide by historical standards.
Whether Ghana can translate its mispricing argument into a concrete re-rating timeline will depend on the pace of its post-restructuring fiscal recovery and its ability to maintain programme compliance with the IMF.
