By Joshua Worlasi AMLANU
The country’s first-ever credit rating agency, Beacon Credit Rating Agency (Beacon Ratings) has been launched, in a major step towards strengthening its financial markets.
Beacon Ratings aims to provide independent research, analysis and credit ratings to improve transparency and efficiency in capital, money, insurance and credit markets.
Speaking at the launch event, Beacon Ratings founder, Noble Yao Akaba highlighted the critical need for such an institution in the financial landscape.
“The establishment of Beacon Ratings is not only a dream come true but it is the fulfilment of a glaring need to fill the information asymmetry gap between issuers and investors, insurers and policyholders, banks and depositors, and other related sectors,” Mr. Akaba said.
He explained that many investors he engaged with agreed credit ratings were crucial for well-informed decision-making, but until now no Ghanaian agency existed to provide those services.
“Today, Beacon Ratings is to be officially launched to assess and issue insights and opinions on entities/issuers to enhance the capital, money, insurance, and credit markets; and to assist investors, lenders, insurance policyholders, and trade creditors to make safe, sound, informed and judicious decisions,” Mr. Akaba stated.
Beacon Ratings is expected to impact the domestic financial markets by closing the information gap between issuers and investors, solving principal-agent problems by capping risk levels agents can take, monitoring issuer performance with rating upgrades/downgrades as action signals, and supporting portfolio managers and lenders in investment/credit decisions.
“Beacon Ratings aims to be a leading business analytic and rating agency in Africa. This vision will be achieved by enhancing the efficiency of the money and capital markets, through assessing corporate entities/issuers and financial instruments,” Mr. Akaba affirmed.
He added: “In line with our core value, we reaffirm our commitment to delivering reliable and high-quality ratings with integrity, independence, and transparency.”
The launch was welcomed by Paul Kwabena Ababio, Deputy Director-General of Finance at the Securities and Exchange Commission (SEC). Mr. Ababio said credit rating agencies are vital for establishing a “deep, efficient, diversified, and well-regulated capital market” as envisioned by Ghana’s 10-year Capital Market Master Plan.
“We are delighted to have licensed the first credit rating agency as a testament to the implementation of the 10-year strategic plan,” he stated.
Explaining further, he said: “Credit rating as a business proposition is to provide that critical information to improve the efficiency of the financial market. Thus, the SEC’s approval of Beacon to operate mitigates the problem of information asymmetry between entities/issuers and investors.”
For issuers, Mr. Ababio highlighted that a favourable rating enables companies to raise capital more easily in financial markets, and higher ratings mean lower borrowing costs. For investors, he noted credit ratings provide a standardized way to compare issuer creditworthiness, help set credit risk limits and determine risk premiums, assist investment decision-making based on risk tolerance, and signal when action is needed via rating reviews of existing investments.
“By providing information on default risk and likely future issuer performance, ratings contribute to market efficiency,” Mr. Ababio stated, adding: “Ratings can help establish a more balanced information system, with investors having an additional source to benchmark risks and returns.”
