SSA countries grapple with junk
Namibia is sub-Saharan Africa's (SSA) only remaining investment-rated Eurobond issuer following South Africa's downgrade to junk status.
The southern African nation has US$1.25 billion of bonds denominated in dollars, equivalent to about 10% of its gross domestic product. Botswana and Mauritius have investment-level ratings but no Eurobonds. Moody's and Fitch have both affirmed Namibia one notch above junk status at BBB- and Baa3 respectively. In its assessment released in December last year, Moody's said a downgrade would likely come as a result of government's inability to implement a new fiscal consolidation plan which was introduced to contain public sector debt accumulation beyond Moody's baseline measure. It also said sustained declines in foreign currency reserves below three months of import cover and a material increase in borrowing costs. Fitch on the other hand said factors that would warrant a downgrade in its opinion included, failure to narrow the fiscal deficit which lead to continued rise in the government debt to GDP ratio, a failure to narrow the current account deficit or significant drawdown in international reserves and the deterioration in economic growth.
STAFF REPORTER
The southern African nation has US$1.25 billion of bonds denominated in dollars, equivalent to about 10% of its gross domestic product. Botswana and Mauritius have investment-level ratings but no Eurobonds. Moody's and Fitch have both affirmed Namibia one notch above junk status at BBB- and Baa3 respectively. In its assessment released in December last year, Moody's said a downgrade would likely come as a result of government's inability to implement a new fiscal consolidation plan which was introduced to contain public sector debt accumulation beyond Moody's baseline measure. It also said sustained declines in foreign currency reserves below three months of import cover and a material increase in borrowing costs. Fitch on the other hand said factors that would warrant a downgrade in its opinion included, failure to narrow the fiscal deficit which lead to continued rise in the government debt to GDP ratio, a failure to narrow the current account deficit or significant drawdown in international reserves and the deterioration in economic growth.
STAFF REPORTER
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