Ghanaian banks could face significant pressure on their capitalisation due to the restructuring of local-currency (LC) sovereign debt, Fitch Ratings says. Fitch believes banks will suffer large economic losses when they exchange their existing debt for new bonds with lower coupons and longer tenors. This could lead to material capital shortfalls at some banks but we expect regulatory forbearance to mitigate the impact, enabling banks to remain compliant with minimum capital requirements. The two Ghanaian banks rated by Fitch have sizeable capital buffers that should help their ratings withstand the LC debt exchange, even disregarding regulatory forbearance. The LC debt exchange, launched on December 5, comes alongside Ghana’s efforts to secure IMF support. Fitch views it as a distressed debt exchange and downgraded Ghana’s Long-Term Local-Currency Issuer Default Rating (IDR) to ‘C’ from ‘CC’ as a result. Ghana’s Ministry of Finance has stated that the debt exchan...