Credit rating agency, Fitch Ratings, has placed the sovereign credit rating of five African countries on Under Criteria Observation (UCO) status.
Checks by norvanreports indicate that the five African countries put on UCO status by Fitch include Zambia, Mozambique, Congo, Ethiopia and Tunisia.
A common characteristic of the five African countries put on UCO status, is their credit rating of CCC which indicates substantial credit risk to investors/creditors.
With such a sovereign credit rating, there is a very low margin of safety for investors/creditors with credit default a real possibility.
According to Fitch Ratings, the UCO status of the five countries follows the conversion of the agency’s exposure draft of sovereign rating criteria to final criteria.
The UCO indicates that ratings may change as a direct result of the final criteria.
It does not however, indicate a change in the underlying credit profile, nor does it affect existing Outlooks.
According to Fitch Ratings, it will resolve the UCO status of the five African countries in the next six months.
“The outcomes will depend on Fitch’s assessment of the appropriate notching based on the new criteria. Not all issuers on UCO will have a rating change upon resolution,” it added.
Source:norvanreports