South Africa’s FSB deregisters Fitch as credit ratings agency


The Registrar of Credit Rating Agencies announces the cancellation of registration of Fitch Southern Africa Limited as a credit rating agency with effect from September 4th, 2015.

This follows a request by Fitch Southern Africa that their registration be cancelled. The cancellation of the registration means that Fitch Southern Africa, or any other Fitch office or entity, will no longer issue credit ratings for regulatory purposes in South Africa.

The deregistration has no implication for South Africa’s sovereign rating because that rating is handled by Fitch internationally, Phumza Macanda, a spokeswoman for the National Treasury, said by phone to Bloomberg on Friday.

Fitch holds a negative outlook on the nation’s sovereign rating of BBB, which is two levels above junk, and was due to publish an assessment in December. This is when the ratings currently issued will expire at the end of the year (4 months from now).

To ensure continuity and to maintain financial stability the ratings issued by Fitch Southern Africa will be valid for a period of 4 months and ratings issued in conjunction with another rating agency will be valid for a period of 14 days after the date of publication of the Notice of deregistration on the Financial Services Board’s (FSB) website.

Thereafter, Fitch clients will need to seek a rating from another FSB registered credit rating agency. As a condition of cancellation, Fitch Southern Africa has been advised by the Registrar to inform its South African clients and rated entities of its de-registration.

So how does forex come into play here? A weak currency makes paying back debt issued to foreign investors and priced in foreign currency more expensive…

Forex wise, the South African Rand has been getting hurt like other emerging market currencies over the last couple of years.
Forex wise, the South African Rand has been getting hurt like other emerging market currencies over the last couple of years. Two-year chart pictured above.

Q&A: Fitch Ratings

1. Why did the FSB deregister Fitch?

The FSB received a request from Fitch that they be deregistered.

2. What happens to entities that currently have Fitch ratings?

Credit ratings from Fitch South Africa and any other Fitch entity, including those Fitch entities domiciled in other locations may no longer be used for regulatory purposes in South Africa. Entities that currently hold Fitch ratings will have to replace such ratings in the following manner: a. Entities with “Fitch South Africa only” ratings will have to seek a rating from another FSB registered credit rating agency.

This is to be done within four months from the date that the notice of deregistration is published on the FSB website. b. Entities with dual ratings, i.e. those that hold a rating from Fitch South Africa plus another registered credit rating agency will have 14 days for the dual rating to remain valid. Thereafter they will have to replace the Fitch rating with a rating from another FSB registered credit rating agency.

3. Are any other Rating agencies currently in similar discussions with the Registrar?

No.

4. Will this cancellation affect South Africa’s sovereign rating?

Sovereign ratings are not necessarily dependent on a single rating agency view on South Africa but on all those who carry out such ratings. The rating assigned is dependent on a number of factors, financial and other, which are part of and influence the economy.

5. How can investors get more information on this matter?

The FSB’s Credit Ratings Agency team is available to local and International Investors who are welcome to call or send an e mail with their enquiries.

Further details are available on the official release by clicking here.

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South Africa's FSB deregisters Fitch as credit ratings agency

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