Rwanda outlook improves in new S&P rating

Standard & Poor’s Rating Services has revised Rwanda’s long-term credit outlook upwards from a ‘B’ to ‘B+’ rating.
A pupil follows lessons attentively in Rusheshe school in Kicukiro District. (T. Kisambira)
A pupil follows lessons attentively in Rusheshe school in Kicukiro District. (T. Kisambira)

Standard & Poor’s Rating Services has revised Rwanda’s long-term credit outlook upwards from a ‘B’ to ‘B+’ rating.

The rating is run by US-based Standard & Poor’s Financial Services LLC (S&P), one of the top three credit rating agencies globally.

According to the agency, the upward revision is attributed to the government’s ability to access capital markets and reducing risks to external financing due to stable donor flows.

The agency in the ranking process also took into account the Gross Domestic Product (GDP) growth rates that stood at more that 6 per cent in 2014 and projected a growth of about 7 per cent between 2015 and 2018.

According to the agency, such an outlook is considered stable.

Last year, the rating agency had ranked Rwanda at B which was attributed to low GDP per capita in the region as well as reliance on donor support.

“The stable outlook reflects our view that stability of external funding will support Rwanda’s external position, while its fiscal position will not significantly deteriorate from our current forecasts,” a research update by the agency read in part.

This is not the first agency to upgrade Rwanda’s credit rating.

In July last year, Fitch, another of the top three international ratings agencies, upgraded Rwanda’s long-term ratings to ‘B+’ from ‘B’, with the high economic growth prospects and continued expansion and diversification of the limited export base as the key drivers.

At B+, Rwanda is placed alongside countries like Kenya, Senegal, and Mozambique.

According to analysts, financial markets use ratings from reputable agencies such as Fitch, Standard and Poor’s and Moody’s Investor Service as safeguards when assessing risks.

The agency’s credit ratings range from AAA (highest rating possible) to D (rating for default).

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