S&P downgraded Cameroon’s long- and short-term foreign currency sovereign rating by six notches on 8 August, from B-/B (highly speculative) to the SD/SD (partial default) category.
Standard and Poor Global Ratings, Moody’s, Fitch are all well-known names when we talk about foreign rating agencies that have become the tailors of the sovereign credit rating in Africa despite the curiosity of the assessments in sawtooth here and there often observed.
This follows a ranking by Moody’s ten days ago in which it downgraded Cameroon’s ratings from B2 (very speculative) to Caa1 (High risk). All rating agencies evoke common reasons for the low grades, including ; the late payments of debts to “Deutsche Bank Espagne” between January and November 2022, and other non commercial creditors.
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If the same agency decided to raise Cameroon’s rating, moving it from SD / SD selective default to CCC + / C first level of the extremely speculative category on August 10, 2023, that is to say two days after having lowered it, there is still a curiosity to observe if we refer to the case of Ghana in December 2022, whose rating had been lowered by S & P only after announcing that it was in default with its international and local creditors.
While the country has made efforts to honor debt service despite multiple shocks, including Covid-19, the war in Ukraine, tight financing conditions, high inflation, volatile oil prices and security threats ; the regular degradation of Cameroon’s rating has the immediate consequence of making it more difficult to access international capital markets and more tough refinancing conditions, which reignites the debate on the relevance of the international ratings approach in Africa.
Even if the report of the United Nations Development Program (Undp) of May 2023 emphasizes that the approaches of S & P Global Ratings, Moody’s and Fitch to give a rating to the quality of African issuers are not always appropriate, Cameroon although facing constraints, such a broad degradation of its issuer profile is not exempt from criticism.