GCR Releases a Frequently Asked Questions Publication on State Owned Entities
Johannesburg, 08 April 2021 – GCR Ratings (“GCR”) has released a Frequently Asked Questions (“FAQ”) publication on State Owned Entities (“SOEs”). The publication applies to issuer credit ratings and issue credit ratings (on both national and international scales) which have a meaningful component of Government interest, either directly through shareholding or indirectly by licensing and regulation. SOEs are considered to be a subset within a broader industry and, as such, ratings for SOEs and other National Government-controlled companies are conducted under the relevant sectoral criteria.
SOEs exhibit a unique mix of both private and public sector institution characteristics. On the one hand, SOEs are usually partially or wholly owned by the national government of a particular country, or fall under some regional jurisdiction within a country. Even where the entity may have been privatised, the provision of services and the pricing thereof tends to be highly regulated. On the other hand, SOE’s tend to operate as corporatised legal entities, with a distinct Board of Directors and a management structure similar to that of private sector entities. GCR has published this research to clarify for users of our ratings (both Issuers and Investors) how we account for the unique and often conflicting characteristics within the broader sector Criteria.
This FAQ publication is not separate criteria and should be read in conjunction with Criteria for the GCR Rating Framework, and GCR’s Rating Scales, Symbols and Definitions, as well as the above referenced sector criteria, all of which are available on our website.
Sector Head: Corporate and Public Sector Ratings
+27 11 784 1771
Group Head of Ratings
+27 11 784 1771
Related criteria and research
Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Corporate Entities, May 2019
Criteria for Rating Local and Regional Governments, May 2019
Criteria for Rating Financial Services Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
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.