Rwanda maintains B+ note on Standard and Poor’s credit ranking

On 11 February 2020 at 02:40

Standard and Poor’s (S&P), an index which represents the stock market’s performance by reporting the risks and returns of the biggest companies maintained Rwanda’s credit rating at B+ after it was raised from B in August 2019.

In a statement published on February 7th, 2020, S&P noted that the outlook is stable as Rwanda is expected to continue to achieve above-average real GDP growth and establish balance against risks of fiscal slippages and rising government debt.

S&P credit rating is used by sovereign wealth funds, pension funds, and other investors to gauge the creditworthiness of Rwanda thus having a big impact on the country’s borrowing costs. In the future, S&P predicts a raise in Rwanda’s rating if the economic growth materially outperforms.

In June 2018 however, S&P warned that debt held by state-owned enterprises (SOE) has rapidly increased over the past two years, and stood at about 6% of GDP and that it might lead to re-evaluate Rwanda’s ranking.

GDP growth in Rwanda is mostly driven by construction projects, constant improvement in the industry and service sectors as well as a trade which is backed up by a great performance from RwandAir, the carrier airline of Rwanda.

S&P predicts an increase in GDP by 7.7% every year from 2020 to 2023 due to the improvement in infrastructures, energy projects, stadiums, schools, health centers, and residential homes. In addition, an improvement in agriculture and industries is expected brought about by investment. The mining industry will also contribute to stimulating economic growth.

The positive outlook reflects S&P view that the upcoming pipeline of investment projects, along with higher exports and consumption, will drive strong medium-term growth prospects.

Analysts say B+ is a good economic indicator for Rwanda and that it will allow investors to assess the overall performance of the market in Rwanda.

Rwanda maintains B+ note on Standard and Poor’s credit ranking