1 1 MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT GOVERNMENT OF MAURITIUS SOVEREIGN CREDIT RATINGS Presentation by William Cox Resident Adviser U.S. Treasury Office of Technical Assistance 13 February 2007 2 Who are the rating Agencies? • Globally recognized authorities on assessing credit risk • The source of independent quantitative ratings for countries, companies and securities • Providors of information for global investors to make decisions on allocating capital • Largest ratings agencies are: Moody’s Standard and Poors Fitch • Many other ratings specialists exist
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Who are the rating Agencies? · • The rating scale ranges from AAA to D • AAA countries are the largest and the richest economies in the world. Primarily located in Europe, North
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MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT
GOVERNMENT OF MAURITIUS
SOVEREIGN CREDIT RATINGS
Presentation by
William Cox
Resident Adviser
U.S. Treasury Office of Technical Assistance
13 February 2007
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Who are the rating Agencies?
• Globally recognized authorities on assessing credit risk
• The source of independent quantitative ratings for countries,companies and securities
• Providors of information for global investors to make decisions on allocating capital
• Largest ratings agencies are:Moody’sStandard and PoorsFitch
• Many other ratings specialists exist
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What is a Sovereign Credit Rating?
• The rating scale ranges from AAA to D
• AAA countries are the largest and the richest economies in the world. Primarily located in Europe, North America, Asia (Japan and Singapore) and Oceania (Australia and New Zealand)
• D signifies Default
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Between the two extremes , the letter scale progresses by notches (Moody’s / S&P) :
Aaa / AAAAa / AAA /ABaa / BBBBa / BBB / BCaa / CCCCa / CCC / CD D
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Between the two extremes , the letter scale progresses by notches (Moody’s / S&P) : (ctd)
• Each letter grade is further subdivided into threedivisions, i.e. A 1/A + (Moody’s / Standard & Poors)or Baa 2/BBB, or Ba 3/BB -
• The ratio scale attempts to reflect the probability of default by an issuer
• Ratings of Baa 3/BBB - and above are considered to be “investment grade”
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What is Mauritius’ Current Rating?
• The Government of Mauritius is rated Baa 2 (negativeoutlook) by Moody’s for a foreign currency loan
• The Government of Mauritius rating for a localcurrency issue is Baa 1 (stable outlook)
• Note that these are investment grade ratings
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How does Mauritius’ Rating Compare with other Developing Countries?
• Mauritius ’ rating is quite high for the developing world
• The rating is particularly high in Africa
• The country is one of only four in Africa with investmentgrade ratings: Botswana, South Africa, Tunisia and Mauritius
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Moody’s Ratings for African CountriesForeign Currency Government Bond