Rating Services

GCR rates the full spectrum of security classes and employs the largest team of rating analysts in Africa

Rating Services

Rating Services Offered

GCR rates the full spectrum of security classes and employs the largest team of rating analysts in Africa. Operations are split into four key rating units:

1) Financial Institutions: namely banks and non-bank financial institutions, which includes banks, building societies, discount houses, leasing companies, corporate intermediary financing companies, microfinanciers, third party collection companies, investment companies (holding level and subsidiaries), servicer quality ratings, fund and asset manager ratings. view
2) Insurance: namely short term insurance, assurance, reinsurance and healthcare. view
3) Corporate and Public Sector Debt: namely corporates & industrial borrowers; property funds; parastatals, utilities, state governments & local authorities. view
4) Structured Finance & Securitisation. view

GCR publishes various types of ratings, which can be categorised into credit ratings and non-credit ratings.

Non-credit ratings relate to opinions on operational and financial strength and includes credit assessments, servicer quality, asset manager management quality and funds ratings.

GCR’s credit ratings provide a forward looking opinion on either 1) the relative ability of an entity to meet its financial obligations as they fall due (issuer credit rating) or 2) the creditworthiness of an obligor with respect to a specific financial obligation, class of financial obligations or a specific financial program (issue/instrument credit ratings). GCR’s credit ratings are designed primarily to provide relative rankings relating to overall creditworthiness. The ratings are not measures of absolute default probability. Creditworthiness encompasses the likelihood of default, and talks to the ability and willingness of an issuer to meet its financial obligations in full and on time.

GCR accords both long term and short term credit ratings. Short term credit ratings are generally assigned to obligations considered short term in the relevant market, typically with an original maturity of no more than 365 days. Accordingly, long term credit ratings relate to financial commitments with maturities of longer than 12 months.

GCR accords both National and International scale ratings and clearly specifies which is being rated on the front page of each rating report. Additionally, national scale ratings are denoted by a special identifier for the country concerned. The rating methodologies and rating scales utilised in the accordance of both types of ratings are very similar, but the key difference is that one scale measures the capacity to meet obligations relative to a global peer group, while the other measures capacity to meet obligations relative to the lowest credit risk within a country. An explanation of the different types of ratings accorded can be found on GCR’s website.

Rating Fees

GCR receives compensation for assigning solicited credit ratings. Such compensation is paid by the entity soliciting the rating. Fee structures are summarised in a credit rating contract, which is discussed and finalised before the commencement of the credit rating process. Contract discussions may only be held with GCR’s business development officer, whose details are available on the website. GCR charges an initial rating fee at the time of the initial rating exercise and an annual surveillance/maintenance fee subsequently for such time as the credit rating remains in issue. Fees in all cases are negotiated by the business development team, and this team is not involved in any ratings activities. Rating fees are determined by various factors including, but not limited to, the complexity of the assignment and the type of rating required, and range between R215,000 to R1.2m in South Africa, and USD15,000 to USD60,000 in other African countries. The business development team may alter the fee structures for volume Issuers and other entities.

How Long Does the Process Take

The time taken to accord a credit rating can vary and will for example depend on the time taken by the rated entity/issuer and/or its agents to meet information requests. A full credit rating process typically takes between 6 and 8 weeks, although longer or shorter periods may apply depending on the circumstances.

Why Obtain a Rating

A favourable rating can immediately result in an increased pool of investors, can facilitate direct access to capital markets and can ultimately result in reduced funding costs. Furthermore, the extensive distribution of the detailed rating report can prove to be a highly effective complement to an organisation’s own investor relations activities.

Finally, quite apart from the rating, the process provides a useful management tool insofar as it provides management with the benefit of a knowledgeable, independent, third party opinion on the organisation and its operations (including the results of an extensive “benchmarking” process across a wide range of financial, operational and control variables).