GCR's Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical
approach across multiple sectors, was designed to improve the transparency of GCR's ratings. It also allows comparability between
different countries, regions and sectors as demonstrated in the below charts.
• A positive correlation is noted between REITs with high geographic diversification to international lower risk jurisdictions and the strongest credit profiles amongst GCR’s rated portfolio.
• Against stronger economic backdrops, albeit not shielded from expected softer leasing conditions in 2023, income growth trends from international regions are expected to remain solid after rebounding more swiftly post the pandemic, supported by portfolios with good asset quality and long-term leases.
• GCR’s highly rated REITs typically display large exposures or are sector specific to retail and logistics and have robust balance sheets.
• The likelihood of any possible positive rating actions over the next 12-18 months is greater at the higher end of GCR’s rating spectrum.
GCR's Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical
approach across multiple sectors, was designed to improve the transparency of GCR's ratings. It also allows comparability between
different countries, regions and sectors as demonstrated in the below charts.
GCR's Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical
approach across multiple sectors, was designed to improve the transparency of GCR's ratings. It also allows comparability between
different countries, regions and sectors as demonstrated in the below charts.
The South African Interest-bearing (“SAIB”) fund market amounted to ZAR793.5 bln (c. USD52 bln) at September 30th 2020, making it by far the largest on the African continent. Reflecting the relative safety and stability of the fund type, alongside the uncertain economic environment, interest bearing funds have been a significant outperformer versus the other domestic fund types in South Africa.
Additional information: The funds tend to be dominated by the top 5 banks in South Africa, which represents a concentration risk in a bank-led financial crisis. Positively, the South African Banking system is considered to be sound, despite the recent pressures. The short-term funds can hold greater levels of counterparty diversification, but the concentration with the banks remains vast. On the other hand, short-term funds clearly take on slightly higher risk.
GCR’s Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical approach across multiple sectors, is designed to improve the transparency of GCR’s ratings. It also allows comparability between different countries, regions and sectors.
Nigeria Country Risk Score: Nigeria’s Country Risk Score of 3.75 balances its strong economic base, supported by significant natural resources and large population, against low wealth levels, moderately weak institutional scores and currently restrained economic growth.
Due to the Covid-19 pandemic, 2020 was a highly uncertain year with risks of premium growth contraction and earnings strain in the Kenyan insurance industry viewed to be elevated, noting pre-existing pressures. However, given better than expected 3Q 2020 industry performance displayed in the Insurance Regulatory Authority quarterly report, national scale relativities are broadly expected to remain consistent with previous periods and the stable outlooks are viewed to be well supported going into 2021.
Over the near term, no major rating movements are expected within the GCR portfolio of South African Medical Schemes, despite economic challenges emanating from the COVID-19 pandemic. We expect persisting pressures on membership growth and age profile, consistent with the steady downward trend of memberships’ characteristics. However, these credit negatives are expected to be offset in the short to medium term by the strength of schemes’ financial profile, with a lower claims experience compared to pre-pandemic periods stimulating net healthcare surpluses and reserves accumulation. Note is taken of the potential additional burden of financing COVID-19 vaccines for non-members, and of a normalisation of claims, which could weaken schemes’ credit profiles over the outlook horizon. Nevertheless, buffers accumulated until 2020 appear sufficient to cater for near term risks, while schemes generally continue abiding to prudent management and governance guidelines. Over the longer-term, accrued economic challenges due to the Covid-19 pandemic may strain an already stagnant industry, further favouring consolidation movements as smaller schemes are less able to withstand the pressures. As a result, we expect consolidation to be a recurrent theme for the industry.
GCR’s Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical approach across multiple sectors, is designed to improve the transparency of GCR’s ratings. It also allows comparability between different countries, regions and sectors.
South Africa’s Country Risk Score remains at 7.00 despite mounting challenges facing the economy. A sharp contraction in GDP growth, lower GDP per capita, worsening fiscal position, rising unemployment and social inequality all contribute to a broadly negative overlay on future prospects.
The GCR Ratings Framework is anchored upon the GCR Risk Score. This numerical scoring system, which forms a single analytical approach across multiple sectors (including Financial Institutions, Insurance Companies, Corporates, Asset Management, Investment Holding Companies and Financial Services Companies), was designed to improve the transparency of GCR’s ratings. Furthermore, GCR risk scores simultaneously determine both international and national scale ratings, which is a significant enhancement from the traditional approach of determining national scale ratings from international ratings via mapping tables. Lastly, we believe the GCR’s Ratings Framework anchors an entity’s creditworthiness in its operating environment.