Zambia urges investors to ignore 'unsolicited' Moody's downgrade

2015-09-28 10:52

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Lusaka - Zambia's government urged investors to ignore what it called an unsolicited credit downgrade from rating agency Moody's, adding it was mindful of the need to maintain its debt at sustainable levels.

Moody's downgraded the credit-worthiness of Africa's second-biggest copper producer to B2 from B1 on Friday. It cited slower economic growth, depressed commodity prices and power shortages and expectations the country's fiscal and debt metrics would deteriorate.

The downgrade "should be ignored because its correctness was not discussed with any authorized representative of the Zambian government," it said on Sunday in a posting on its Facebook page.

"The only agencies with whom the Zambian government has rating relationships are Fitch and Standard & Poor's. The two are the only ones with whom we engage on policy matters, and data provision and reconciliation."

In May, Moody's had affirmed its then B1 rating on Zambia.

Zambia's economy is likely to grow by less than 5 percent in 2015 due to a power crunch that has hit output from mining companies already grappling with a slide in global copper prices, Finance Minister Alexander Chikwanda told Reuters earlier this month.

The kwacha currency fell more than 2% to a record low of 10.85 against the dollar on Friday.

Zambia issued a $1.25bn 10-year Eurobond in July at a hefty 9.375% interest rate to finance a budget deficit expected to swell to 20 billion kwacha by the end of 2015 from an initial forecast of 8.5 billion.

Read more on:    zambia  |  southern africa

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