Fitch Ratings recently upgraded Namibia’s National rating on the South African scale to ‘AA+(zaf)’ from ‘AA-(zaf)’. The Outlook is Stable. Fitch has also upgraded Namibia’s senior unsecured bonds rated on the national scale to ‘AA+(zaf)’ from ‘AA-(zaf)’.
The upgrade follows the recalibration of the South African National rating scale following Fitch’s downgrade of South Africa’s Long-term local currency IDR to ‘BBB’ from ‘BBB+’ on 4 December 2015. National rating scales provide a relative measure of creditworthiness for rated entities only within the country concerned and are mapped against the international local currency rating scale for that country.
According to Fitch’s revised South Africa National rating scale mapping, a ‘BBB’ local currency rating is now equivalent to a National rating of ‘AA(zaf)’ or above. In this context, Namibia’s ‘AA+(zaf)’ rating denotes Fitch’s expectations of very low default risk relative to other issuers or obligations in South Africa.
Sharing its opinion on the upgrade, PSG Namibia said, “Despite a recent deterioration in its fiscal and external balances, Namibia’s investment-grade rating is safe. The State’s track record of sound financial management, combined with policy continuity and political stability, are amongst the key factors supporting the country’s creditworthiness. We believe that, unlike South Africa, Namibia will be able to hold on to its investment-grade rating over the medium term. A key near-term challenge will be maintaining a sufficient level of foreign reserves in light of an expected decline in SACU receipts during the 2016/17 fiscal year”.