Tanzania’s first credit rating is already on review for downgrade
Euromoney’s risk survey suggests it should have been lower in the first place. President John Magufuli’s erratic policy making could have a detrimental impact on Tanzania’s credit rating
On March 2, Moody’s became the first main credit rating agency to award a sovereign rating to Tanzania, and plumped for B1 with a negative outlook, annoying the authorities anticipating a stable rating. However, Euromoney’s country risk survey suggests Moody’s was right to be cautious.
In fact, a lower B2 stable rating would have been more suitable considering Nigeria, which is one place higher in the global rankings, and Kenya (four places higher), are both a notch lower than Tanzania. The consensus scoring of analysts taking part in the survey indicates there should be no distinction between the three borrowers.
All are medium-to-high risk credits within the fourth of ECR’s five categories and all are roughly equivalent in terms of their aggregated (and weighted) economic, political and structural risks. The survey factors in a wide range of variables affecting creditworthiness along with scores for capital access and debt ratings. Tanzania presently scores 36.5 out of a maximum 100 points overall and its score has drifted gently downwards during the past decade.