Plans by the Securities and Exchange Commission (SEC) to make credit ratings compulsory for public debt issuances are being welcomed by investors, even as issuers express concerns about costs and potential reputational risks.
The policy, backed by the Ghana Stock Exchange (GSE), is designed to provide investors—particularly pension funds and insurance firms—with independent, standardized assessments of credit risk.
Credit ratings, issued by licensed firms such as Agusto & Co. (Ghana) and Beacon Ratings, evaluate the likelihood that an issuer will meet its debt obligations, using established scales that distinguish between “investment grade” and “speculative” instruments.
Institutional investors have largely welcomed the development, noting that it will improve comparability across assets and support more disciplined portfolio management.
“Ratings will help standardize how we evaluate credit risk,” a pension fund manager said, adding that the move could deepen confidence in Ghana’s recovering bond market.
The policy comes at a pivotal time, as Ghana re-enters the domestic bond market following its debt restructuring, creating opportunities for new corporate issuances.
However, not all stakeholders are fully convinced. Smaller companies, in particular, worry that the cost of obtaining and maintaining ratings could be burdensome. There are also concerns that weaker firms could receive low ratings, potentially limiting their access to capital.
Regulators acknowledge these challenges but argue that the long-term benefits outweigh the short-term costs. According to the SEC, rated securities are likely to attract stronger investor demand and, over time, lower borrowing costs due to reduced information gaps.
Beyond individual issuers, analysts say the introduction of ratings could transform how risk is priced in Ghana’s financial markets, shifting away from reliance on broad market sentiment toward more data-driven assessments.
As implementation begins, the move is expected to reshape Ghana’s capital markets—bringing greater transparency, but also new discipline for issuers seeking public funds.
By: Toma Imirhe / businesspostonline
