GCR expects the combined impact of the COVID-19 inspired global and domestic slowdown, alongside the locust swarm in Q120, to reduce Kenya’s economic growth to around 1%-2% in 2020.
The open economy of Mauritius is particularly susceptible to the global response to the COVID-19 pandemic. Domestic corporate debt is also considered to be quite high and external risk is higher for the banking system and country than regional peers.
Based on the recent interim results, key credit metrics are, so far, broadly in line with GCR’s expectations for the top tier South African banks. GCR projected credit costs to rise to 200bps by the end of 2020, while 70-80% downward stress was applied to forward looking earnings.
GCR Ratings is very pleased to announce that it has been recognised as an ECAI by the Bank of Mauritius, under the Direct Recognition method in the corporate segment. This is in addition to already being licensed as a credit rating agency by the Financial Services Commission in Mauritius.
GCR Ratings has broadened its Commercial Property Sector Risk score base to include selected European territory groupings. Concurrently, GCR has also revised Spain’s Property Risk Score to 7.75, from 8.00 previously, amidst short-term uncertainty in the wake of the COVID-19 pandemic.
GCR has placed Commercial Real Estate on Negative Trend to reflect the sector’s vulnerability to the vagaries of a protracted recessionary climate. We expect structural limitations of the domestic economy to constrain real estate performance and funding flexibility well beyond 2020, as consumer behaviour continues to shift, and Commercial Property is further crowded out of capital markets.
The strong capitalisation and oligopolistic characteristics of the Namibian banking sector is expected to enable them to cope with rising asset risk, at least over the short to medium term.
GCR expects weak performance across almost all corporate sectors to remain weak for the remainder of 2020 due to a collapse of consumer confidence. Expectations for a recovery are tempered by the rising number of business closures, removing critical productive capacity from the economy.
The criteria titled ‘Criteria for Fund Ratings’ predominantly applies to fixed income funds, including money market funds and other funds with portfolios that invest primarily in debt and debt like securities. Fund ratings (“f”) are not credit ratings. Therefore, they do not measure the relative ability of a fund to repay principal and/or interest in a timely manner. Rather, Fund Ratings indicate an opinion regarding the fund’s ability to preserve principal value under varying market conditions that may be affected by credit risk, interest rates, liquidity, as well as other market conditions.