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Credit Rating Can Help African Countries Access International Financial Markets
As the Governors of the African Development Bank Group meet in Arusha, Tanzania, from 31 May to 1 June 2012, the annual rating of AfDB by Standard and Poor’s, Moody’s and Fitch, has led to call to African countries wishing to access international financial markets to join the process for their own benefit.
A series of meetings are being held from May 28-31, to review sovereign rating methodologies and benefits for African countries to get rated for enhanced resources mobilization on international capital markets. This is an ongoing initiative of the Bank, to support the resource mobilization efforts of countries and leverage Bank resources allocated to its regional member countries.
“Currently, only 23 African countries out of 53, are rated by major Rating agencies covering the continent, namely; Standard & Poor's, Moody's and Fitch. The AfDB Group works in synergy with these agencies, to encourage African countries to be rated, to enable them to maximize their ability to mobilize resources on capital markets,” says AfDB’s Finance and risks management director, Kodeidja Diallo. She also explained that it is a requirement for African countries to be well rated if they would raise funds at competitive rates.
Presentations by the rating agencies described benefits, building on specific examples on rated African countries in comparison with sovereign ratings in Latin America, Asia and the Gulf. The presentations also focused on rating efforts in the financing of PPP and State owned enterprises as well as utilities.
Participants had the opportunity to interact both on sovereign ratings as well as the advantages for accessing global bond markets.
Sponsored by the Bank Group finance vice-presidency and the Chief Economist’s office with coordination by the financial risk management department, the meeting brought together central bank governors, Finance ministers and their technical teams as well as heads of capital markets in Africa. The two major presentations were facilitated by senior officials from Standard & Poor’s and Moody’s.