Moody’s Downgrades Namibia’s Rating to Ba1

By Dipo Olowookere

Last Friday, Moody’s Investors Service (Moody’s) announced downgrading Namibia’s long-term senior unsecured bond and issuer ratings to Ba1 from Baa3 and maintained the negative outlook.

A statement issued by the global rating agency explained that the key factors for downgrading the rating were caused by the erosion of Namibia’s fiscal strength due to sizeable fiscal imbalances and an increasing debt burden.

In addition, it explained that it was due to limited institutional capacity to manage shocks and address long-term structural fiscal rigidities; as well as the risk of renewed government liquidity pressures in the coming years.

Moody’s said despite the weakening of its creditworthiness, the country’s key credit metrics in the economic, fiscal and external spheres are currently well aligned with those of Ba1-rated peers.

The rating is also supported by the country’s strong growth prospects in the coming years, the agency said.

However, the maintenance of the negative outlook following the downgrade of the rating to Ba1 reflects the risk that the erosion in key fiscal and debt metrics could be more pronounced than currently anticipated, giving rise to significant funding challenges.

Namibia’s long-term local currency bond and bank deposit ceilings were lowered to A2 from A1. The long-term foreign currency bank deposit ceiling to Ba2 from Baa3, and the long-term foreign-currency bond ceiling to Baa2 from A3.