RATINGS: On 18 September, Benin was affirmed the B1 rating by Moody’s with a stable outlook. The affirmation was driven by Moody’s view that the country’s robust growth will continue, supported by ongoing structural reforms and increased levels of investment in the economy, reinforcing economic resilience.
This is balanced by relatively weak, albeit improving institutions, and low, although stable, fiscal strength due in particular to a high debt burden.
Meanwhile in Ethiopia, on 15 September, Moody’s downgraded the sovereign’s foreign currency (FC) long-term issuer and senior unsecured ratings to Caa3 from Caa2 and affirmed its local currency (LC) long-term issuer rating at Caa2. At the same time, Moody’s changed the issuer’s outlook to stable from negative. The main driver behind the downgrade of Ethiopia’s FC rating is the increasingly high likelihood of default on FC-denominated private-sector debt because of strained external liquidity, for which the government has sought relief under the G20 Common Framework for debt treatment.
The downgrade is, however, limited to one notch, to Caa3, to reflect Moody’s expectation that the losses for private-sector creditors are likely to be commensurate with an indicative range of 20 percent-35 percent, which is lower than the historical average of losses for sovereigns of about 50 percent because the government primarily seeks liquidity relief. (Moody’s)
