Rated to be financed: what a credit rating changes for a CEMAC company
How independent credit assessment and rigorous financial statements open access to institutional investors and regional markets.
On regional financial markets, as in bank credit committees, information asymmetry remains the main obstacle to financing Central African companies. Without objective benchmarks on the quality of governance and the resilience of cash flows, lenders apply a high risk premium or demand disproportionate collateral.
Credit rating as a bargaining lever
Undergoing quantitative analysis and a credit rating profoundly changes the conversation with providers of capital:
- It puts repayment capacity on an objective footing, based on verifiable operating ratios and stress tests.
- It clearly separates the risk of the company or project from that of its general environment.
- It prepares the company to raise quasi-equity or project bonds from the region's institutional investors.
Preparing the accounts and governance ahead of time
A good rating cannot be improvised at the time of issuance: it is the result of earlier work to clean up the balance sheet, formalise commercial contracts and rigorously model future cash flows.