The investment grade gives the company the opportunity to showcase its credit worthiness in raising funds.

The credit rating of some four State-owned enterprises launched some months ago in view of testing the outfits’ capabilities of raising funds has started producing results. Cameroon Telecommunications (CAMTEL), one of the four companies shortlisted for the exercise has received a note of satisfaction from the rating firm, Bloomfield Investment. 

According to Jean Paul Tonga, Operations Manager of the firm, “CAMTEL has obtained an investment grade (BBB) on the long term and an investment grade (A3) on the short term as well. These grades represent a moderate risk and are acceptable to investors for a prudent investment.” He said the performance represents a great revolution on public entities’ financial management.

The rating, Mr Tonga added “should allow CAMTEL to show what it is worth in terms of credit worthiness and pretend to raise cash without government guarantee.” The rating, he added, also demonstrates that CAMTEL is a transparent company and has now a performance dashboard to show for. “This rating is an indication of the capacity of CAMTEL to meet its financial obligations on the short, medium and long term horizon. This capacity is considered moderate by the rating agency,” he disclosed.

What Implication?

He noted that the implication for the economy is important in the sense that investors will realize the willingness of the Cameroonian government to create a conducive business environment for economic development. “For the government, the credit rating of public entities is an excellent tool to monitor the credit quality of public entities and their performance. This will also allow the government to reduce its subsidies to public companies that are able to borrow from the financial market without its guarantee,” he said.

And for CAMTEL, Mr Tonga said, not only the credit rating is a key to easily access the financial market, but also it’s a negotiation tool to ensure that credit conditions are adequate to the credit worthiness of the borrower. “With an investment grade, CAMTEL will be able to use the stock market as a financial leverage and can also negotiate appropriate conditions related to its BBB credit quality.”

Other Companies

Three other State-owned companies involved in the rating include Douala Ports Authority, Cameroon Water Utilities, CAMWATER, and the National Petroleum Depot, SCDP. Bloomfield, according to its Operations Manager, is still discussing the details for the rating of these three companies and hopes to finalize it very soon in order to proceed with the exercise. “This phenomenon will probably bring private entities in the same process. That will be very interesting for the regional capital market as transparency is one of the mandatory conditions for an efficient market. In order to promote credit rating in the CEMAC region, Bloomfield plans to organize a regional seminar in Douala around mid-January,” he said.