The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | Isaac Khisa | Global credit rating agency, Moody’s, has affirmed A3/Stable Rating for Africa’s multilateral insurer, African Trade Insurance Agency (ATI), citing strong capitalisation and liquidity.
The new rating stands alongside Standard &Poor’s ‘A/Stable’ rating, which ATI has maintained for over a decade. ATI said in a statement on May.14 that securing a second rating is part of its medium-term strategy to further strengthen its governance and oversight mechanisms, enabling it provide better support to its member countries.
ATI’s investment grade rating can, through the application of its insurance products, act as a substitute for the often sub-investment grade ratings of its member countries.
Amongst other benefits, this allows ATI’s African member countries to borrow for longer and for less, thereby helping them improve the management of their debt profiles.
For instance, the benchmark 10-year Government bond issued by countries with high investment grade ratings attract low interest rates of less than 2.50%, whereas single-B rated countries can receive rates above 8%, which adds considerably to a government’s sovereign debt burden.
Moody’s said ATI could qualify for an upgraded rating with an increase in its membership base and participation by larger African countries.
Currently with 14 member countries including Uganda and 9 other corporate shareholders including UK Export Finance (UKEF), the African Development Bank and Trade Development Bank, Ghana and Nigeria are expected to complete their membership this year.
ATI CEO George Otieno, said ATI recognizes the importance of the oversight that ratings agencies provide and relies on the objective opinions of internationally reputable agencies such as Moody’s to provide a fair and impartial view of ATI’s credit risk.
“ATI is committed to transparency and external ratings are crucial to ATI’s ability to fulfil its mandate of helping to attract investors to the region,” he said.
“We are proud to count Moody’s as our newest rating agency alongside our decade-long partnership with S&P. This places ATI in a position of even greater credibility and financial strength as we strive to continue to support the evolution of Africa into one of the world’s most attractive and competitive destinations for global investors.”
ATI was founded in 2001 by African countries to cover the trade and investment risks of companies doing business in Africa in order to encourage more inward investments. ATI provides Political Risk, Surety Bonds, Trade Credit Insurance and Political Violence and Terrorism & Sabotage cover.
As of 2018, ATI had supported cumulatively US$45.5 billion in trade and investments across Africa in sectors such as agribusiness, energy, exports, housing, infrastructure manufacturing, mining and telecommunications.
