Moody’s credit rating unsolicited, says Govt

GOVERNMENT has said the Moody’s  Investor Service which has rated Zambia’s credit rating as deteriorating is unsolicited and against the best practices.

The Government has assured citizens, its partners and the international community that the only agencies with whom the Zambian Government had ratings with were Fitch and Standard & Poors.

The Moody’s Investors Service also downgraded the Government of South Africa’s debt ratings to Baa2 from Baa1.

The Ministry of Finance said

 

 

in a statement yesterday that the assessment by Moody’s that Zambia’s credit rating had deteriorated should be ignored because its correctness was not discussed with any authorized representative of the Zambian Government.

The Ministry of Finance stated that although Moody’s rating Agency had in the past made frantic attempts for a formal arrangement with the Zambian Government, the move had not materialised because Government felt that Fitch and Standards & Poors were sufficiently competent to provide the required independent credit rating services.

The statement stated that Government was pleased to announce that the scheduled statutory credit review by Standard & Poors last Friday reaffirmed the country’s rating at B/B long and short term foreign and local currency ratings with a stable outlook.

“This is to inform the public and the investor community that the rating done by Moody’s is unsolicited and against the best practices as Zambia has not subscribed to their services. We reaffirm to our citizens, our partners and the international community that the only agencies with whom the Zambian Government has rating relationships are Fitch and Standard & Poors.

The two are the only ones with whom we engage on policy matters, and data provision and reconciliation. Therefore, the assessment made by Moody’s that Zambia’s credit rating had deteriorated should be ignored because its correctness was not discussed with any authorized representative of the Zambian Government,” the Ministry of Finance said. The Government appealed to Moody’s to refrain from imposing assessments on Zambia because the act was inconsistent with international best practices governed by the contractual obligations between the credit rated and the rating agency.

Government said it was mindful of the need to maintain debt sustainability and to sustain a favourable credit rating stating that it had factored borrowing into its estimates and that Zambia was still sustainable by all major international debt thresholds. It said that the process of establishing a Sinking Fund had reached advanced stage and the resources would be put aside for the establishment of the Fund from 2016 onwards.

“In view of the foregoing, while welcome requests for caution and interest in our affairs, the analysis by Mr. Matt Robinson supplied to the media, supposedly on behalf of Moody’s rating agency, should be treated as an unsolicited assessment as we did not have any input into it.

‘‘We appeal to Moody’s to restrain themselves from imposing assessments on Zambia because the act is inconsistent with international best practice governed by contractual obligations between the credit rated entity and the rating agency,” the Ministry of Finance said.

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