Fitch Ratings, one of the top five credit rating agencies in the world, appealed to the Botswana companies to get ratings in an attempt to improve liquidity in the market as a way of putting the Botswana Stock Exchange (BSE) on the 21st century map.
“You cannot have a fully-fledged capital market without rating. If you want to tap into the most sophisticated market, then you need a rating,” Tertius Smith of Fitch Ratings South Africa said Thursday.
Fitch Ratings is one of the ivy-league rating agencies in the world and currently works with 6054 financial institutions around the world, namely: Africa, Asia-Pacific, Europe and the United States of America.
The institutions are covered from 49 offices that are sprawled across the world.
“Credit rating enables you access to the debt capital markets and broadens the investor base.
“We do not just work on the basis of financial statements. We sit down with the corporations and management and, after that, we assign a rating for the entity,” Smith added.
The company boosts of a critical mass of experts who are the final people to assign a rating to institutions. The move by Fitch Ratings is expected to bolster calls by Barclays Bank of Botswana, which has repeatedly been calling local companies to seek credit rating to lure investors and at the same time for investors to be assured that their investment is safe.
This comes after the implosion of LobTrans and African Express but their examples are far remote because it would be difficult for rating agencies to snoop on fraud related issues.
“The companies would have to tell us what they would like to do (in order to improve their businesses) and if they fail they go to rating watch,” he added.
Fitch Rating is gunning to do some work for a number of entities in the country and they are expected to pay at least 12 visits to Botswana before the end of this year. The company does banking, corporate, state and municipal ratings.