Ekow Afedzie, Managing Director of the Ghana Stock Exchange (GSE), has hinted of plans by the Exchange to create its own rating agency for listed stocks on the local bourse.
The Managing Director averred that the move will enhance the reputation of the Ghana Stock Exchange.
“As part of efforts to boost the credibility of the stock market, the Ghana Stock Exchange will soon conclude processes for the establishment of an investor credit rating agency for players on the market.”
Ekow Afedzie
According to the managers of the local bourse, the domestic credit rating agency, which will be created by the end of the year, is to rate the issuances of investors in the market.
Augustine Simons, Head of the Fixed Income Bond Market, noted that the establishment of the agency is a key instrument for the growth of the market.
“To help us develop our corporate market, there’s the need for us to have domestic credit rating agency to help in rating issuers that come on the market to raise funds. So, that gives comfort to investors on where they will be putting their money”.
Augustine Simons
The Head of the Fixed Income Bond Market further noted that the creation of the rating agency will also help private companies assess the creditworthiness of bonds and the companies or governments that issue them.
Augustine Simons moreover underscored the importance of creating the investor credit rating agency, noting that it provides risk measures for various entities listed on the Ghana Stock Exchange.
Managing Director of the Ghana Stock Exchange, Ekow Afedzie, emphasized that the time is ripe to introduce key elements within the market to aid growth and allow institutional and individual investors to rely on such rating agencies and their in-depth research to make investment decisions.
“There are certain features that will make the bond market more credible. One of them is the credit rating agency, because it will help the investor to know the credit rating of that entity before making a decision when it comes to corporate bond or whatever the agency will say could serve as a guide to investors.”
Ekow Afedzie
Recently, some credit rating agencies such as: Fitch Ratings, Moody’s downgraded the country. Moody’s downgraded Ghana’s long-term foreign currency sovereign rating from B3 to Caa1 (with a stable outlook) on February 4, and stated that the country faces an increasingly difficult task of addressing liquidity and debt challenges.
In January, Fitch also downgraded Ghana’s long-term foreign-currency issuer default rating to B- from B, with a negative outlook.
In response, the country slammed the ‘leviathan’ ratings agencies after Moody’s downgrade. The African Union’s African Peer Review Mechanism waded in to support Ghana after the country criticised Moody’s downgrade decision and alleged the ‘institutional bias’ of credit ratings agencies towards African countries.
Addressing the 35th Africa Union summit in Addis Ababa, Ethiopia, President Akufo-Addo, also waded into the debate to slam the rating agencies.
“We need to guard against the continuing consequential stranglehold of rating agencies, which has affected the cost and access to capital markets for African countries.”
President Akufo-Addo
President Akufo-Addo further called for a concerted effort in reforming global financial architects.
“We need to work collectively as African Union to reform the global financial architect even as we build and strengthen our financial institutions.”
President Akufo-Addo
Therefore, it is a good news for the Ghana Stock Exchange to plan of having it’s own credit rating agency for listed stocks.
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