NEWS | The AU Hate International Ratings Agencies & Plan To Make Their Own
Financial News
International Ratings Agencies like Moody’s, S&P and Fitch offer insights into the credit worthiness of various institutions, companies and even sovereign debt and bonds. For example, in August last year, Fitch Ratings downgraded the ratings of the US stating there has been a steady deterioration in standards of governance in the USA.
Since these ratings are often used by investors to inform their decisions, negative ratings or downgrades can cause nervous investors to look elsewhere.
The most famous ratings agencies are: Moody’s Service, S&P Global Ratings and Fitch Ratings. They use slightly different scales, but all 3 use an alphabetical scale where AAA is the highest rating and C (or D) are the lowest. They often use a + or – to indicate sub-levels and publicise a positive or negative outlook pointing to future increases or lowering of ratings.
Many African states have been hit by lowered ratings recently. In the first 6 months of last year, 11 African countries got hit with 13 negative ratings decisions. The causes are many, and the ratings agencies hold fast to their ratings and how they came to them.
“Many African states have been hit by lowered ratings recently”
Now the African Union say they want to create a better, more understanding, more insightful credit rating agency to provide better ratings that take more information and more factors into account than these long established international ratings agencies. It is likely to be called the African Credit Rating Agency or ACRA.
