Nigerian credit rating agency Agusto makes inroads into Kenyan market

Money Markets

Customers at a Fina Bank branch in Nairobi. Guaranty Trust Bank acquired the bank last year. Photo/FILE 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• Bank of Africa and Guaranty are among companies that have sought Agusto’s services.

Nigerian credit rating agency Agusto & Co has started making inroads into the Kenyan financial market by roping in local operations of fellow West African-based companies.

 

Malian lender Bank of Africa and Nigeria’s Guaranty Trust Bank have dropped out of Global Credit Rating (GCR) of South Africa in favour of Agusto.

The firm, licensed in Kenya last year, was the first such agency to be registered in Nigeria and is now using its association with the parent companies to pull in Kenyan businesses.

“Our majority shareholders Morocco bank BMCE is rated by Agusto so we saw no need to do the same thing twice,” said Bank of Africa chief executive Kwame Ahadzi.

Guaranty Trust Bank acquired Fina Bank last year. Fina Bank used to be rated by GCR while Guaranty is rated by Agusto.

“One of our objectives is to enhance investor confidence by providing independent opinions on the credit worthiness of companies. We intend to do this for all clients including West African companies in Kenya and we have approached most of the banks and other institutions in Kenya,” said Agusto’s East Africa regional representative Edward Olajide.

He said the agency recently concluded the rating of Platinum Credit Limited. The microfinance institution was awarded a rating of Bbb (Ken).

Capital Markets Authority (CMA) requirement that a credit rating agency must show its affiliation with an international firm to be licensed in the Kenyan market has kept off local firms, leaving the competition for corporate business to South and West African firms.

Apart from Agusto, GCR, a South African firm, is licensed by CMA to offer the service.

Local firms rated by GCR include CBA, Stima Sacco, Mumias Sugar, TPS East Africa, UAP Insurance, Nakumatt, Centum and Mabati Rolling Mills. Car and General recently exited GCR soon after receiving a negative outlook rating due to its debt levels.

The automobile dealer defended its debt position stating that it was under no pressure requiring it to liquidate its property holdings as recommended by the agency.

The rating business is expected to grow in the country as more firms seek debt to fund their growth.

Last year Stima Sacco became the first co-operative union to be rated in the country. Insurance firms have also been seeking ratings so as to convince corporates that they are in a position to settle any claims that may arise.

Metropol, another rating agency, specialises in small and medium sized enterprises in Kenya despite being licensed in Rwanda. The bureau is currently piloting a project with Equity Bank for its rating of SME’s to be used to access funds.

Credit-rating reports are based not only on a company’s past performance but also on its outlook, allowing investors or lending institutions to factor in its cash flow projections.