Rating Services

GCR rates the full spectrum of security classes and employs the largest team of rating analysts in Africa

Rating Services

Rating Services Offered

GCR rates the full spectrum of security classes and employs the largest team of rating analysts in Africa. Operations are split into four key rating units:

1) Financial Institutions: namely banks and non-bank financial institutions, which includes banks, building societies, discount houses, leasing companies, corporate intermediary financing companies, microfinanciers, third party collection companies, investment companies (holding level and subsidiaries), servicer quality ratings, fund and asset manager ratings. view
2) Insurance: namely short term insurance, assurance, reinsurance and healthcare. view
3) Corporate and Public Sector Debt: namely corporates & industrial borrowers; property funds; parastatals, utilities, state governments & local authorities. view
4) Structured Finance & Securitisation. view

GCR publishes various types of ratings, which can be categorised into credit ratings and non-credit ratings.

Non-credit ratings relate to opinions on operational and financial strength and includes credit assessments, servicer quality, asset manager management quality and funds ratings.

GCR’s credit ratings provide a forward looking opinion on either 1) the relative ability of an entity to meet its financial obligations as they fall due (issuer credit rating) or 2) the creditworthiness of an obligor with respect to a specific financial obligation, class of financial obligations or a specific financial program (issue/instrument credit ratings). GCR’s credit ratings are designed primarily to provide relative rankings relating to overall creditworthiness. The ratings are not measures of absolute default probability. Creditworthiness encompasses the likelihood of default, and talks to the ability and willingness of an issuer to meet its financial obligations in full and on time.

GCR accords both long term and short term credit ratings. Short term credit ratings are generally assigned to obligations considered short term in the relevant market, typically with an original maturity of no more than 365 days. Accordingly, long term credit ratings relate to financial commitments with maturities of longer than 12 months.

GCR accords both National and International scale ratings and clearly specifies which is being rated on the front page of each rating report. Additionally, national scale ratings are denoted by a special identifier for the country concerned. The rating methodologies and rating scales utilised in the accordance of both types of ratings are very similar, but the key difference is that one scale measures the capacity to meet obligations relative to a global peer group, while the other measures capacity to meet obligations relative to the lowest credit risk within a country. An explanation of the different types of ratings accorded can be found on GCR’s website.

Rating Fees

GCR receives compensation for assigning solicited credit ratings. Such compensation is paid by the entity soliciting the rating. Fee structures are summarised in a credit rating contract, which is discussed and finalised before the commencement of the credit rating process. Contract discussions may only be held with GCR’s business development officer, whose details are available on the website. GCR charges an initial rating fee at the time of the initial rating exercise and an annual surveillance/maintenance fee subsequently for such time as the credit rating remains in issue. Fees in all cases are negotiated by the business development team, and this team is not involved in any ratings activities. Rating fees are determined by various factors including, but not limited to, the complexity of the assignment and the type of rating required. The business development team may alter the fee structures for volume Issuers and other entities.

How Long Does the Process Take

The time taken to accord a credit rating can vary and will for example depend on the time taken by the rated entity/issuer and/or its agents to meet information requests. A full credit rating process typically takes between 6 and 8 weeks, although longer or shorter periods may apply depending on the circumstances.

Credit Ratings Process and Timelines

Allocation of an Analyst
At the start of the year or in the case of a new rating, at the start of the Credit Rating Process, GCR will allocate an Analyst to perform the process. The Analyst is responsible for:
• Gathering information from and conducting meetings with the Rated Entity/Issuer and/or its agent;
• Performing credit analytics and compiling a Credit Rating Report, as well as a Ratings Panel Pack;
• Presenting the results and a Credit Rating recommendation to a Ratings Panel; and
• Communicating Credit Rating Actions to the Rated Entity/Issuer and
• Communicating the Credit Rating Actions to the market (in cases of public ratings).
At no time may the Analyst, or any other person involved in the rating process, make proposals, recommendations or give advice, either formally or informally, on ways to improve the rating, including the design of structured finance instruments or any other aspect of the rating on which the credit rating agency is expected to issue a credit rating.

Gathering of Information and Conducting of Meetings
At the start of the Credit Rating Process Analysts will compile a list of requested information to be provided by the Rated Entity/Issuer. After having received the information, the Analysts will schedule meetings with relevant senior management of the Rated Entity/Issuer to discuss issues material to the Credit Rating. GCR may also liaise with agents such as accountants and lawyers to discuss relevant matters.

Analysis of the Information and According of the Credit Rating
GCR’s analysis and Credit Rating Actions are based on information provided by the Rated Entity/Issuer and/or information available from other sources known to it and believed to be relevant and reliable. GCR’s Analysts may have access to Confidential Information obtained during the Credit Rating Process. Such information will be treated in accordance with GCR’s “Confidential Information Policy”.

The Analysts will use the information to compile a Credit Rating Panel Pack, which will typically include the Credit Rating Report. The Analysts will present the pack and/or report together with a Credit Rating recommendation to a Ratings Panel. Such Ratings Panel is conducted in accordance with GCR’s “Principles for the Conduct of Ratings Panels Policy”.

GCR’s Credit Ratings are accorded and monitored in accordance with relevant GCR Credit Rating criteria or methodologies. If no specific criteria apply, GCR will explain in the Credit Rating Report what methodology has been applied to accord the Credit Rating. Rating Criteria and methodologies are not of a static nature and are revised from time to time, and at least reviewed annually. The panel reviewing the Credit Rating criteria or methodology must consist of the relevant Sector Head and its senior rating employees, as well as three (3) independent members from the pool of non-related Sector Heads and/or senior analysts in order to have a qualifying quorum.

Communication of draft Credit Rating report to the Rated Entity/Issuer
Prior to distribution to the Ratings Panel, GCR will typically provide a draft copy of the Credit Rating Report to the Rated Entity/Issuer and/or its agent. GCR will allow the Rated Entity/Issuer ten (10) working days to provide factual comments and corrections, as well as identify any Confidential Information for removal from the final version of the report. Allowances for time extension will be made under exceptional or justifiable circumstances. If a Rated Entity/Issuer suggests wording changes, GCR will consider such comments but is not obliged to make any changes. Any proposed change that corrects a factual error or prevents the inadvertent release of Confidential Information will be given consideration before final release of the Credit Rating Report and will be made, if warranted. Changes that reflect concerns or misunderstandings by the Rated Entity/Issuer will be discussed. In all instances, GCR will maintain final editorial control over its published materials, including Credit Rating Rationales. Such a draft copy of the Credit Rating Report sent for comment to a Rated Entity/Issuer and/or its agent will be accompanied by a note that states:
“GCR is sending you this initial draft so that you can call our attention to any factual errors, as well as to identify any Confidential Information in the draft that should be removed at the time of distribution, although will be included for panel purposes. If you have any comments on the report that are not factual in nature, we encourage you to discuss these with us. Although, we will use our discretion in making editorial changes to the document, thus ensuring our independence. This document will be distributed to GCR’s Ratings Panel and a Credit Rating accorded within ten (10) working days from the time we have sent this email. The Rated Entity/Issuer is required to provide comments within this time period. In the event we do not receive comments, we will assume that all is in order and that you have given your consent to proceed. Please ensure that this draft rating report remains confidential.”

Communication of Credit Rating Actions to the Rated Entity/Issuer
Following the Rating Panel, GCR will communicate the outcome of the Rating Panel to the Rated Entity. GCR will typically provide a copy of its final draft Credit Rating Report to the Rated Entity/Issuer with five (5) working days allowed between the accordance of the Credit Rating and its ultimate finalisation. This is to allow the Rated Entity/Issuer an opportunity to appeal the Credit Rating Action, and a final chance to identify Confidential Information. The specific cut-off time and date of the Feedback Window must be communicated to the client explicitly, e.g. 5pm, Wednesday the 26th of March. On the morning of the Feedback Window cut-off date, should no response have been received from the Rated Entity, a second courtesy email is to be sent to the Rated Entity as a reminder regarding the time allocated for the Feedback Window. A phone-call is also made during the course of this day, in order to ensure that the emails have been received by the relevant personnel. In exceptional circumstances, GCR will allow an additional grace period for feedback on the final Credit Rating Report, so long as the underlying information remains up to date (for example, budgets provided may not be older than four months), failing which renewed information must be provided to GCR and a further Ratings Panel convened, if necessary. The copy of the final draft Credit Rating Report sent for comment to a Rated Entity/Issuer and/or its agent will be accompanied by a note that states:

“GCR is sending you this final draft so that you can call our attention to any inadvertent inclusion of confidential information in the draft. We will finalise and release our rating after a period of five (5) working days from the time we have sent this email. If we have not received a response within this time period we will assume all is in order. To ensure uniform distribution of the Credit Rating Action to the market, the information in this draft report should not be disclosed or released prior to its finalisation and communication by GCR.”

If the Credit Rating is a Public Credit Rating, a Credit Rating Announcement will accompany the Credit Rating Report.

Appeal Process
A Rated Entity/Issuer has the right to appeal a Credit Rating Action. Such an appeal should be lodged with the relevant Analysts by the Rated Entity/Issuer in writing within five (5) workings days following the notification of the Credit Rating Action decided by the Ratings Panel.

A Credit Rating Action may only be appealed if the Rated Entity/Issuer is able to provide additional, material factual information that would have an impact on the Credit Rating Action. The Analysts will present such additional information to a Credit Ratings Appeal Panel in accordance with GCR’s “Principles for the Conduct of Ratings Panels Policy”. The decision of the Credit Ratings Appeal Panel is final and not subject to further appeal.

Monitoring of Credit Ratings
Unless accorded on a “point-in-time” basis, Credit Ratings are monitored periodically. Unless otherwise required by prevailing regulations, GCR aims to conduct a full review of a Credit Rating at least annually. Depending on the circumstances more regular reviews may take place.

Credit Ratings may be changed, maintained, accorded Rating Watches or Rating Outlooks or Placed Under Review or Expire as a result of changes in, additions to, accuracy of, unavailability of or inadequacy of information, or for any other reason GCR deems sufficient.

GCR automatically discontinues a Credit Rating when the related Rated Security is paid in full and does not publicly announce such discontinuations of Credit Ratings. In terms of on-going Credit Ratings, which reflect either review or expiry date, GCR manages such transactions in line with the “Credit Rating Process Timelines” reflected below.

Credit Rating Process Timelines
Once GCR has rated and publicised a Public Credit Rating, GCR becomes responsible to the investing public for ensuring that the Credit Rating remains current and relevant. For this reason, and in order to comply with regulatory requirements, all existing Credit Ratings must be reviewed at least once in each 12 month period (or sooner where applicable). In order to ensure that sufficient time is allocated to conducting a thorough rating review, each Rating Analyst must ensure that they conduct their on-site credit rating meetings at least 4 weeks prior to the review/expiry date. At all times, the review/expiry date will guide the Credit Rating Process, and the following guidelines have been implemented to ensure conformity to the above:
• 12 weeks prior to a specific Credit Rating’s review/expiry date, a 1st system generated email will be forwarded to the relevant Sector Head informing him/her of such expiry. At this time, the Sector Head will allocate the company/issuer/transaction for review to a Rating Analyst, who will in turn immediately make initial contact with the client regarding the rating review (please refer to GCR’s Credit Rating Process Policy and Credit Rating Process Flow Chart for more detail). In addition to the information requested from the client, the Analyst must ensure that the following excerpt is incorporated into their initial communication to the client:
“We would like to draw your attention to the fact that the most recent rating accorded to your company expires on the last day of [XX month], year. In order for GCR to conduct a thorough rating review of your company, we require all of the requested information to be submitted at least 6 weeks prior to this date. Further, we are required to conduct the on-site meetings with your management team at least 4 weeks prior to the expiry date. Failure to conduct a full credit rating review within the timeframe detailed above, either due to your company’s inability to provide all information requested above timeously and/or management meeting delays, may lead to GCR placing the rating ‘under review’, or alternatively withdrawing such rating from the public domain at review/expiry date”.
• 4 weeks prior to a specific Credit Rating review/expiry date, a 2nd system generated email will be forwarded to the relevant Sector Head informing him/her of its imminent review/expiry date (this will exclude rating reviews that have already been finalised prior to this date). At this point, the Sector Head will liaise with the responsible Analyst to determine whether any delays regarding the public release of the Credit Rating are likely to be encountered in the final 4 weeks leading up to the review/expiry date. Should such concerns be warranted, an urgent meeting of the Sector Head, Analyst and GCR MD will be called to discuss the options available at review/expiry date.
• In the event that a Credit Rating review of a specific company has not been finalised at the review/expiry date (i.e. the rating has not been released publically), each Analyst will be responsible for ensuring that a Rating Announcement is prepared and disseminated to the market on the review/expiry date. Such Rating Announcement will indicate whether the Credit Rating has expired or been placed under review, while providing brief explanation as to the reasons for GCR’s decision (i.e. insufficient information to conduct a review; client management delays etc). All Rating Announcements must be signed off by GCR’s MD.

Credit Rating Dissemination
Following finalisation, Credit Rating Actions are communicated via Credit Rating Announcements as per GCR’s Rating Communication Policy.

Limitations of Credit Ratings
GCR will place appropriate disclaimers on its Credit Rating Reports and Credit Rating Announcements, indicating any material limitations of the Credit Rating.

Other
GCR is committed to applying similar principles as mentioned under this policy to Indicative Credit Ratings, Credit Assessments, Unsolicited Credit Ratings and Public Information Credit Ratings.

Credit Rating Process Timelines

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Recent Rating Reports

10 Oct 2017: Rand Merchant Bank Nigeria Limited

10 Oct 2017: Leadway Assurance Company Limited

10 Oct 2017: North South Power Company Limited

10 Oct 2017: First Bank of Nigeria Limited

10 Oct 2017: Nigeria Mortgage Refinance Company Plc

10 Oct 2017: Dangote Cement Plc

10 Oct 2017: Fortis Microfinance Bank Plc

10 Oct 2017: Flour Mills of Nigeria

10 Oct 2017: Sterling Investment Management SPV PLC

10 Oct 2017: FSDH Merchant Bank Limited

Purchase Rating Reports

Parties interested in purchasing individual or sectoral rating reports and/or bulletins from Global Credit Rating Company Limited are kindly requested to contact us on the following telephone numbers or email address.

Telephone: (+2341) 462 2648, 460 5001, 0805 615 8393, 0803 352 871

Email: bisi@warltd.com

Email: tunde@globalratings.net

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For a full list of Credit Ratings performed by Global Credit Ratings Company Limited please click here