Moody's, S&P and Fitch give first credit rating to Ethiopia

May 19, 2014

Ethiopia has for the first time received a credit rating from the three major international rating agencies.

Ethiopia has for the first time received a credit rating from the three major international rating agencies.

Standard & Poor's and Fitch assigned a rating of "B" to the country's sovereign treasury bonds, while Moody's gave a "B1".

Fitch said that Ethiopia has registered an average annual growth rate of 10.9 percent over the past five years, thanks "to significant public investment in infrastructure" as well as growth recorded in the agricultural and services sector, Jeune Afrique reports.

Standard & Poor's also expects that real GDP will grow by 9.1 percent in 2014 and 9.2 percent in 2015.

However, all three agencies have warned about the vulnerability of the Ethiopian economy. Fitch Ratings highlighted the weak private sector and the difficulties faced by companies to access funding.

Moody's is also concerned about "the high concentration of the banking sector and the dominance of the three major state-owned banks, which hold 73 percent of the total assets of the country - 63 percent for the Commercial Bank of Ethiopia alone."

In addition, the three agencies noted that the country remains subject to geopolitical risks related to the volatility of its neighbours: Somalia, Eritrea, Sudan and South Sudan.

These ratings pave the way for a possible debut sovereign debt issue on international markets.

Ethiopian Prime Minister, Hailemariam Desalegn told Reuters in October that it planned a debut Eurobond once it had secured a credit rating.

Ethiopia is considered as sub-Saharan Africa's fifth-biggest economy.

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