GCR updates the South African Sector Risk Scores to account for 12 weeks of COVID-19 disruptions
Johannesburg, 02 July 2020 – GCR Ratings (“GCR”) has updated its South African Corporate Sector Risk Scores taking into account the negative impact the COVID-19 disruptions have had to the local economic performance, with a view as to how each corporate sector will be affected. In this regard, GCR has maintained the South African Corporate risk scores for Agriculture and Construction, while simultaneously lowering the sector scores for the following:
Education lowered to ‘7.0’ from ‘8.0’;
Fast Moving Consumer Goods lowered to ‘5.5’ from ‘6.0’;
Gaming lowered to ‘4.5’ from ‘5.0’;
Healthcare lowered to ‘6.5’ from ‘7.0’;
General Hospitality lowered to ‘3.5’ from ‘4.0’;
Information Communications and Technology lowered to ‘5.25’ from ‘5.5’;
Logistics lowered to ‘4.5’ from ‘5.0’;
Primary Manufacturing lowered to ‘3.5’ from ‘4.0’;
Secondary Manufacturing lowered to ‘3.5’ from ‘4.0’;
Mining lowered to ‘3.5’ from ‘4.0’;
Property lowered to ‘6.0’ from ‘6.5’;
State Owned Companies lowered to ‘6.5’ from ‘7.0’;
Discretionary Retail lowered to ‘4.5’ from ‘5.0’; and
Non-discretionary Retail lowered to ‘6.0’ from ‘6.5’.
The corporate sector risk score is an aggregation of a) cyclicality b) ease of doing business and c) sector specific dynamics scores, and is intended to provide users with an overview of the major factors that impact GCR’s assessment of the relative risk of each sector.
Corporate Sector Risk Scores are assessed on a scale of between 0-13, and are a key factor in determining the operating environment component score for each Issuer. The core of the GCR Ratings Framework is based on GCR’s opinion that an entity’s operating environment largely frames its creditworthiness. As a result, the operating environment analysis anchors the underlying risk score for the GCR ratings criteria. GCR combines elements of the country risk and sectoral risk analysis, blended across countries for Issuers operating across multiple jurisdictions, to anchor a corporate to its current operating conditions. For more details, please read the related criteria and research listed below.
GCR will periodically publish updated “South African Sector Risk Scores”, which will supersede previous publications. The publication titled “South African Sector Risk Scores, 02 July 2020”, supersedes the publication “South African Sector Risk Scores, 20 March 2020”.
Sector Head: Corporates
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Deputy Sector Head: Corporates
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Related criteria and research
Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Corporate Entities, May 2019
Criteria for Rating Real Estate Investment Trusts and Other Commercial Property Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR’s Country Risk Score Report, May 2020
GCR’s South Africa Corporate Sector Risk Score Report, March 2020
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.