Global credit ratings agency, Moody’s, has affirmed the Botswana Development Corporation (BDC)’s ratings, but changed its outlook to negative from stable.
The BDC is amongst a handful of local parastatals which subscribe to global credit ratings agencies.
In its latest update, Moody’s said the change to a negative outlook primarily reflects the government’s weakening capacity to support the BDC “in case of need”. Moody’s recently downgraded Botswana’s sovereign credit ratings, citing the prolonged diamond downturn. The credit ratings agency said the negative outlook further reflects the deteriorating operating conditions, which in turn pressure the BDC’s financial performance, particularly its profitability, asset quality and liquidity position.
Moody’s researchers said the BDC’s consolidated bottom-line profitability had already shown signs of weakness during 2024, while non-performing loans remained at “very high levels”.
The Baa3 rating applied to the BDC by Moody’s is still investment grade, but just one notch above speculative grade, which is defined as carrying a higher risk of default. Credit ratings assessments and the outlook from agencies such as Moody’s determine the interest rate entities such as BDC pay when they seek to access credit from lenders.
