The Government is to undergo a second rating by Standard & Poor’s (‘S&P’) to review the country’s strong economic growth, and the reform process that made the business environment friendlier to investors.
The ministry of Finance and economic Planning will of August 16 host one of the world’s leading rating agencies (S&P) with coverage on 126 sovereigns globally.
Mid September, the Agency will visit Rwanda and meet with various government ministries, Ambassadors, donors, RDB among others and 8 weeks later, send initial rating to the Ministry of Finance for discussion.
According to a Press release issued by Finance Ministry Friday, Fitch Ratings recently upgraded Rwanda’s rating to a ‘B’, in recognition of the country’s more secure investment climate.
Ratings provide an independent objective assessment of the credit worthiness of a certain country or a security.
The factors considered in the rating include the country’s economic status, transparency in the capital market, level of public and private investment flows and foreign investment.
Other factors considered are foreign currency reserves, political stability, or the ability for a country’s economy to remain stable despite political change.
Frank Higiro, the Communications Advisor Ministry of Finance and Economic Planning says: “A second rating would reassure investors that Rwanda has a good investment climate which could also lead to better borrowing costs for local companies and the government.
Such an opportunity will also enable Rwanda to access the international capital markets either through a sovereign bond offering.
It will also enable local companies with better access to the capital markets. After receiving their respective ratings, several African countries have issued international bonds to raise capital.
Ratings lie on a spectrum ranging between highest credit quality on one end and default on the other. Long–term credit ratings are denoted with a letter: from triple A (AAA) which is the highest credit quality to C or D (depending on the agency issuing the rating), the lowest or ‘junk’ quality. S&P is expected to complete the ratings process by the end of 2011.
The agency began coverage of Africa 17 years ago and currently has extensive coverage with a rating on 15 countries in Sub-Saharan Africa.
It is headquartered in New York with company offices located in 26 countries globally with representative office for Sub Saharan Africa in Johannesburg, South Africa.
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