The three major credit rating agencies – Moody’s, S&P Global and Fitch – have often differed among themselves when rating African institutions and countries. Their opinions don’t have to be aligned, but a huge gap in the ratings suggests inaccuracies in the analyses.
Wrong ratings have consequences. They drive up the cost of capital. Lower ratings indicate higher risk, and lead investors to demand higher interest rates to compensate for that risk. When a sovereign (country) is downgraded, its borrowing costs increase. It has to pay more interest on the same amount of debt, and has less chance of getting funding for development.
