GCR publishes updated Jurisdictional Supplement for Criteria
2 August 2019 – GCR Ratings has published
an updated Jurisdictional Supplement for Criteria.
GCR Ratings (“GCR”) is occasionally
required to qualify credit ratings issued within specific markets or
jurisdictions in order to reflect any
divergent or market related nuances which have the potential to detract from
the comparability of GCR credit ratings across jurisdictions within which GCR
provides credit rating services.
As of the 2nd of August 2019, GCR wishes to
bring to the public’s attention on an ongoing basis the following
Zimbabwe: At the time of this publication, the Zimbabwean government and her agents are failing to honour obligations in foreign currency (“FCY”) in a timely manner and have restricted the private use of FCY for domestic payments. Therefore, GCR believes the risk of honouring such obligations are severely impaired for all rated and non-rated entities operating in the country. In order to maintain a credit hierarchy, which allows investors to most accurately assess risk on a relative basis, GCR is no longer going to reflect the non-payment of FCY lines as a default event for national scale ratings on entities operating in Zimbabwe, if the default is purely that of transfer & convertibility and not of general liquidity. I.e., the rated entity must prove that it has the local currency equivalent to pay a foreign currency obligation(s), but not necessarily in the originally contracted currency, to avoid a default rating.
whilst GCR’s Zimbabwean national scale ratings continue to reflect the relative
creditworthiness of the rated entities within the country, they overlook
elements of currency control and deposit freeze that would otherwise possibly
warrant a lower credit rating, as per GCR’s Rating Scales, Symbols and
Definitions. As a result, the national scale credit ratings on Zimbabwean
entities are not directly comparable to credit ratings and risk scores within
At the same time,
GCR will continue to reflect a default event, for both foreign and local
currency obligations, for the international issuer and issue scale ratings of
Zimbabwean entities. This may lead to dislocations between the international
and national scale ratings on a Zimbabwean entity on a GCR risk score or GCR
Nigeria: There has been no change since the publication on the 8th
July. Therefore, the Nigerian national scale ratings will not be reviewed using
the newly published GCR Ratings Framework and associated criteria. These credit
ratings will reflect the criteria under which they were issued and shall be
monitored, reviewed and updated according to those criteria. As a result, the
credit ratings issued in Nigeria cannot be mapped back to a GCR risk score, nor
are such ratings directly compared with other GCR national or international
scale ratings. Please note, that all reports and rating actions note the
criteria used to assess the credit rating.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.