Metropol Corporation’s Credit Rating unit, a defining factor for companies creditworthiness
Kenya only has five credit rating agencies approved by the Capital Markets Authority (CMA) with Metropol Corporation being the only licensed Kenyan Company
The Corporation received the credit rating license in 2014 from CMA and Rwanda Capital Markets Authority with a focus to providing credit ratings to Small and Medium Enterprises (SMEs) and corporates to help them increase their potential to access credit .
Metropol rating is a national scale rating and a product of research and analysis undertaken over ten years to proactively assess the credit risk of a business or a financial obligation.
“We have served the East Africa credit rating industry for over 10 years and done over 100 corporate ratings, 181 SME ratings, and currently conducting credit assessments on 425 firms spread across the East Africa region,” said Metropol Group Managing Director Sam Omukoko.
Metropol rating system comprises distinct scores that cover all categories of risks that impact a business or the performance of a financial obligation. It captures both Macro and Micro economic environments of the business and is country specific.
In demonstrating our rating independence and objectivity, Metropol has sufficient internal checks and balances to safeguard objectivity.
The corporation has a robust rating metric that provides a true creditworthiness picture of an entity or debt instrument. The company offers national scale rating for corporates (Manufacturing and service sectors), insurance, banking, county government( local authorities) and fund managers and market instruments.
Why should your company be rated?
Credit ratings are essential to a business as they tell potential shareholders and banks that the company is worthy investing in. Rating speaks volume to lenders that a borrower will be able to pay back a loan taken.
A good credit rating allows companies and governments to easily borrow from financial institutions or public debt markets at a low interest rate.
With a good rating, companies can choose lenders and negotiate better lending terms. In addition, companies can use a credit rating as a marketing tool to enhance their brand and develop strategic business relationships.
In September last year, Omukoko said the Corporation was in discussion with CMA to encourage issuers to have their securities rated to provide more transparency and promote liquidity in the bond market.
“Our discussion with CMA indicate that they will encourage most of issuers of securities in this market to have their securities rated to provide more transparency to existing and potential investors.”
He spoke during an event which saw the Nairobi Securities Exchange (NSE) listed company, Longhorn Publishers Plc, make its rating public on September 16, 2021. Metropol assigned Longhorn Publishers a Commercial Paper valued at Ksh.1 billion with an A- rating and a short-term outlook as positive.
“Many of the ratings we have done are private and were never brought out in the public. This trend will bring ratings clearly and publicise the fact that ratings play a role in commercial understandings in this country,” he added.
The credit rating of Longhorn commercial paper (valued at Ksh.1 billion), challenged other stock exchange listed companies to embrace credit ratings to woo investors.
Moody’s, a U.S-based agency was the first to enrol in the business and issued publicly available credit ratings for bonds in 1909, and other agencies followed suit in the decades after.
These ratings didn’t have a profound effect on the market until 1936 when a new rule was passed that prohibited banks from investing in speculative bonds—that is, bonds with low credit ratings.
The aim was to avoid the risk of default, which could lead to financial losses. This practice was quickly adopted by other companies and financial institutions.
In Africa, Metropol does Rating as an independent assessment of the creditworthiness of a business entity, financial instrument, project, county (local authority) government or country.
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