This credit rating organism is venturing on the African Market. The Indian agency is turning Mauritius into the hub to the African Market, even in this sector. After having gained credit as a regulator in Mauritius since 2016, this expansion was the next logical step. This expansion to further develop the capital markets by providing professional insights and advice has been inaugurated this Thursday where the mission and values of Credit Rating were explained since creation to sophistication.
The Credit Assessment Institution
This event was an opportunity to push forward the activities of the External Credit Assessment Institution (ECAI). The CARE Ratings (Africa) Private Limited (CRAF), licensed by the Financial Services Commission of Mauritius, has the CARE Ratings Limited (CARE Ratings), African Development Bank (AfDB) and MCB Equity Fund (MEF) & SBM (NFC) Holdings Limited (SNHL) as shareholders. Actually, Care Ratings Africa has a license in Kenya and will be working with the local authorities and regulators to venture on the whole territory. It will be working under the Kenyan Capital Markets Act but having Mauritius as its hub.
In 6 years, CRAF has assigned rating to more than 40 corporates in Mauritius, amongst which were the MCB, Bank One, CIEL, CIM, Ascencia, SBM, Omnicane, Alteo, Mauritius Union, ENL… The Agency has succeeded in assigning credit ratings to bank facilities and bond issue aggregating up till now to Rs 75 billion. Mauritius has more than Rs 110 billion as Corporate Bond Market, out of which 48 billion is rated by the CRAF.
Harvesh Seegoolam calls for no Conflict of Interest
During his speech, the guest of honour of this launch, Harvesh Seegoolam, the Governor of the Bank of Mauritius has clearly stated that through such regulators, “we are able to lower the cost of borrowing. The CRAF gives rise to enormous savings which can be distributed across the market. It is evident that rating will become more and more prominent and CRAs will become more important”. He also added, emphasizing that agencies of this nature of business should not fall in the dilemma of conflict of interest, that the “rating exercise must be done in accordance with the best ethics and there is an element of trust which we must ensure exists. As the economy recovers, it becomes even more important to reassure investors and to review rating exercises carried before the pandemic” he said. He revealed the BOM is putting focus on the Green Bond. “The bank issued new guidelines on Climate Change. As the bank start a putting emphasis on Green Agenda, it is essential that CRAs also put their focus on Green Financing”. The Governor calls upon CRAs to share with regulators any information which might present opportunities for the markets and the economy.
AHC Janesh Kain: Let Competition Be!
For his part, Janesh Kain, the Acting High Commissionner of India in Mauritius, talked about the effects of COVID and war and how global connectedness share both its benefits and shocks. “Globalisation should not be rolled back. Networks of sustainability should instead be built among nations to mitigate the impacts of the shocks caused by globalisation. India has a proven track record of sharing its experience and expertise, and India is willing to share with Mauritius. India is also inspired by and learns from Mauritius. A professionally performed rating can go a long way to build resilience and promote relationships” he said. He also recalled how grateful India is to the Mauritian Government for providing Oxygen Concentrators and Generators in a time of great need, which helped in saving hundreds of lives. He also promotes unbiased rating exercises in this coming implantation in Africa. “Monopoly generates the death of a sector, let competition be” said Janesh Kain motivating new credit rating agencies to implant in Mauritius and Africa, so as to create competition for better accuracy in this field.
Panel Discussion: Developing the Capital Markets
During the panel discussion, former Former Chairman of Enterprise Mauritius, Amedée Darga, also moderator for this exercise, talked about how the sophistication of lenders and borrowers has evolved to demand the services of professional CRAs. Ravi Mohan, CRAF Director, emphasised on how “rating agencies will help in further developing the bond or capital markets by providing professional insights and advice”. Medul Pandya, Director of CRAF and the Executive Director of CARE Ratings, explained how such agencies are at the center of the financial landscape. “No economy can grow without an efficient debt market and no debt market can grow without a CRA. CRAs help borrowers to tap into a lower cost market. CRAs have gone a long way in inculcating financial discipline” he explained. Daniel Essoo, President of the Mauritian Bankers Association, stated that “there are huge interests from the banking community to engage with CRAs to develop the bond market”. For Saurav Chatterjee, Director and Chief Executive Officer of CRAF, “the agency started by breaching the information asymmetry by providing investors with an in-depth financial analysis. In the process, we have been able to educate investors and issuers. CRAF has contributed to the development of the local bond market by assisting issuers and giving comfort to investors, but also advised issuers in structured obligations. Mauritius is well placed to attract both African and European investors” he said talking about this new scope in Africa. He also replied to questions of Sunil Benimadhu, Director of the Stock Exchange of Mauritius on the issue of Mandatory VS Discretionary, stating that “when public’s money is used as an investment, it is a must for this third party to show integrity and transparency”
The CRAF will be soon venturing into other geographies of Africa.
