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ye Kebele chairman
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Ethiopia to get debut sovereign rating within 2 weeks: finance minister

By Aaron Maasho
ADDIS ABABA Mon May 5, 2014 4:45am EDT

(Reuters) - Ethiopia expects to get its first sovereign credit ratings within two weeks, Finance and Economic Development Minister Sufian Ahmed said, paving the way for the country's first foray on to international bond markets.

The three main rating agencies - Moody's, Standard & Poor's and Fitch - visited the Horn of Africa nation in February and March to assess its economy.

"I think next week, or probably the (week after)..., the three ...agencies will announce the rating," Sufian told Reuters. Ethiopia, whose economy and population are among the fastest growing in Africa, is keen to attract international investors to help shift its largely agrarian economy towards textiles and other manufacturing.

It has ruled out privatising its banks and telecoms sector. But it does plan "not only a Eurobond but other bonds as well" once it secures a rating, Prime Minister Hailemariam Desalegn told Reuters in an interview in October. [ID:nL6N0I033U]

Sufian spoke late on Sunday on the sidelines of a meeting with a Chinese delegation led by Premier Li Keqiang. "Everybody will see where (Ethiopia)... is now, and why a number of investors from China, India and Europe are coming here," the minister added.

Beijing is a major partner in Ethiopia's bid to expand its infrastructure, with cumulative investments by Chinese firms to date reaching well over $1 billion, according to official figures.

The International Monetary Fund expects Ethiopia's economy to grow 7.5 percent in each of the next two fiscal years but says the government needs to encourage more private sector investment to prevent growth rates from falling thereafter.
I wonder how we will do in the ratings. :cheers:

Surprisingly optimistic!
16,254 Posts
And yet the Chinese are making loans to us left and right... the "developmentalism" of the Rev. Dems. isn't particularly new, it in a way is the same sort of policies pursued by people like Nkrumah without the overly stated anti-enterprise bent, but it's going to run out of steam soon enough all the same. And then what?

2,416 Posts
Edit: Ironically enough, the Chinese credit rating agency has already given Ethiopia a rating of CCC, which is the lowest (acceptable rating) you can get.

but Chinese credit rating firms have no recognition (yet) in the international market. the financial dictatorship still belongs to the West :lol:
we need to wait some decades before seeing china as a respectable big player...

424 Posts
Hear ye of little faith.

Fitch Rates Ethiopia 'B'; Outlook Stable
09 May 2014 11:41 AM (EDT)

Fitch Ratings-Paris/London-09 May 2014: Fitch Ratings has assigned Ethiopia Long-term foreign and local currency Issuer Default Ratings (IDRs) of 'B'. The Outlooks on the Long-term IDRs are Stable. Fitch has also assigned a Short-term foreign currency IDR of 'B' and a Country Ceiling of 'B'.

Ethiopia's IDRs reflect a balance between weak structural features indicating vulnerability to shocks and strong economic performance and improved public and external debt ratios since debt relief under HIPC in 2005-2007. More specifically, the ratings reflect the following key rating drivers:

-Despite impressive improvement over the past decade, Ethiopia's ratings are constrained by a weak level of development. The country ranks among the weakest Fitch-rated sovereigns on UN human development indicators, with a GDP per capita of USD500 in 2013, well below 'B' medians. Governance indicators as measured by the World Bank are broadly in line with 'B' medians.

-Economic performance is strong. With an average real GDP growth of 10.9% over the past five years, Ethiopia has outperformed regional peers due to significant public investments in infrastructure as well as growth in the large agricultural and services sectors. Despite a track record of high and volatile inflation, it declined significantly in 2013, reflecting lower food prices and the authorities' commitment to moderate central bank financing of the government.

-Fitch expects real GDP growth of 9% in 2014 and 8% in 2015. Ethiopia's growth over the medium-term can be sustained by large, untapped resources, including large hydro-electric potential. However, the private sector's weakness, reflecting the country's fairly recent transition to a market economy, and its inadequate access to domestic credit, could limit growth potential over the medium-term as public investment slows.

-Despite large capital expenditure, the general government (GG) budget deficit remained contained to an average 1.4% of GDP over the past five years, due to low levels of current spending, including a limited wage bill and modest interest payments. As a result, headline GG debt declined steadily in 2005-2012 following the 2005 HIPC/MDRI debt alleviation, and reached 25.8% of GDP in June 2013, well below the 'B' median and regional peers.

-Significant investments in infrastructure (including roads, electricity and railways) have been made possible by the heavy involvement of state-owned enterprises (SoEs), which finance a large part of investments on their own, mostly through heavy recourse to domestic bank credit. Fitch estimates that total SoE debt amounted to at least 25% of GDP at end-June 2013, doubling consolidated total public debt.

-Ethiopia's structural current account deficit - at 5.4% of GDP in 2013 - reflects low value-added exports and investment-related imports. It exerts pressure on international reserves, which at two months of current account receipts, are low compared with peers. However, with debt service also low, reserves relative to debt service are above the 'B' median. Net external indebtedness has risen steadily since 2007, though it remains moderate and in line with 'B'-rated peers. However, growing recourse to non-concessional financing, particularly by SoEs, could increase debt service.


The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well balanced.

The main factors that could lead to a positive rating action, individually or collectively, are:

-Stronger external indicators, including higher exports, as well as stronger FDI and international reserves

-A sustained decline in inflation reflecting an improved macro-policy environment

-Further improvement in structural factors, including stronger development and governance indicators

The main factors that could lead to a negative rating action, individually or collectively, are:

-Rising external vulnerability related to declining international reserves, widening current account deficit or rising external indebtedness

-Increased risk of contingent liabilities from SoEs and publicly-owned banks materialising on the government's balance sheet


The ratings are reliant on a number of assumptions, in particular, the following:

-Continuity in the development model of the country

-Continued strong support from the international community, implying continued aid inflows to the country to support its development

-Demand for Ethiopia's exports (including coffee, other agricultural products and gold) benefiting from the gradual recovery in the global economy, with world GDP growth forecast to increase to 2.9% in 2014 and 3.2% in 2015 from 2.3% in 2013

-No major change in the political regime in the coming years


2,539 Posts
B with stable outlook means we are on par with other African countries that have been rated. It's a junk rating, but those countries did fine when they sold their bonds, so we should be fine too. Junk rating is below BBB- for Fitch. To get there, we need to go from B to BB then to BBB. That's a long ass road.

2,416 Posts
those credit agencies are garbage :

The Bear Stearns Companies, Inc. (a New York based global investment bank and securities trading and brokerage) bankrupted in 2008.

but Bear Stearns was rated AAA like a month before it went bankrupt !!
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