With an emerging Oil and Gas sector that is poised to catapult our country to new heights, the time is opportune for Guyana to consider having a sovereign credit rating. In the context of positive real economic growth expectations for 2021 and beyond, and plans by the Government to transform the economic landscape of Guyana, it may be an opportune time for the Government to consider accessing a credit rating.

BENEFITS

Several benefits will accrue to the Government from accessing the rating including increased access to funding and greater visibility to potential investors.

1. Aligning the Government of Guyana (GOG) with best practices in international capital markets

Investors in most markets expect and even demand credit ratings of the issues and issuers they wish to invest in. The rating is an indication not only of the relative creditworthiness of the rated issue or the issuer but also indicates the country’s willingness to be transparent and speaks well of overall governance.

2. Increased access to funding

By getting rated the GOG will be able to convey its creditworthiness in the universally understood language of credit ratings. The rating as well as the accompanying rating report is an opportunity for GOG to present its strengths to current and potential investors from the perspective of an independent third party. This will enhance the GOG’s ability to access a wider audience of investors.

3. Increased visibility with international investors

While international investors may require a global scale rating, a regional scale rating as Caribbean Information and Credit Rating Services Limited (CariCRIS) will clearly also find favour with such investors as it lends greater on the ground insight and further granularity to the investment analysis. Moreover, it can also position the GOG favourably with respect to other issuers in the Caribbean.

4. Standard-setting

• By being one of the sovereign entities in the region to access and use a CariCRIS regional credit rating, GOG reinforces its leadership role in the development of the regional financial markets and enhances its global market recognition.
• By demonstrating its commitment to align itself with international capital markets best practices, the GOG sets the standard and establishes the imperative for other regional governments and local and regional companies to follow in their footsteps, thereby contributing to a more robust credit culture.

5. Opportunity to contribute to the development of the region’s capital markets.

• Capital markets are essential to the growth of any modern economy and credit ratings have been shown to be an essential ingredient for the development of bond markets. This development process can be accelerated only by the active participation of both issuers and investors.

RATING SERVICE COMPANIES

Global rating agencies that conduct such assessments include Moody, Fitch and Standard & Poor’s.  However, right in the Caribbean, we have Caribbean Information and Credit Rating Services Limited (CariCRIS) which offers similar services. CariCRIS is the region’s premier rating agency, with shareholding by regional Central Banks, several major regional commercial banks, and international development agencies including the Caribbean Development Bank and the Inter-American Development Bank; CariCRIS’ technical partner and also a shareholder is CRISIL Limited, the largest rating agency in Asia and an associate company of the globally-recognised rating agency, Standard and Poor’s.

In assigning a credit rating, a rating agency will examine factors as:

• Income and Economic Structure
• Fiscal Policy and Indebtedness
• Monetary Stability and Macroeconomic Policy
• Balance of Payments and External Liquidity
• Political Risk

CONCLUSION

Many of our Caricom countries already have sovereign credit ratings. These include Trinidad, Barbados and Jamaica. It is expected that Guyana’s Stock Exchange will grow as our capital market evolve and increase. Hence, Guyana needs to be proactive by commencing the process of accessing a credit rating in the very near future as it receives more global attention.

Shaleeza Shaw (Ms)

Secretary and Chairperson of the Green Economy Committee

Georgetown Chambers of Commerce

Dip (Dist); B.Sc (Dist); LLB (Dist); CCP; MBA, CB, MCBIS (Dist).