This month’s economic effect of Gabon’s military revolution will determine Moody’s next course of action regarding the country’s credit rating. In addition, Moody’s is already working on another downgrade review for Niger after that country’s coup in late July.
The two nations have experienced the seventh and eighth coups in West and Central Africa in the past three years. While Moody’s has already downgraded Niger’s Caa2 rating by two full notches, the company has maintained a “stable” stance on Gabon’s marginally higher Caa1 rating.
According to Mickael Gondrand, the chief analyst for Gabon at Moody’s, “the events surrounding the coup are still very much evolving.” We continue to follow the situation and believe the developments are credit-negative.
In his opinion, the major unpredictability at this early point is whether or not Gabon would face economic and financial penalties and what form such sanctions would take.
The Economic Community of Central African States’ heads of state gathering has not yet occurred. The coup has been denounced by France, the United States, and the African Union, which has suspended Gabon’s membership.
Any sanctions imposed would impact investment and commerce, according to Gondrand. According to projections from the World Bank, net inflows of foreign direct investment have been significant in recent years, amounting to an average of 9% of GDP between 2016 and 2021.
He continued, “We think the program, which has already seen delays, is likely to slow even further given the events,” adding that the coup was also likely to affect the support it receives from the international community. However, financing requirements should remain “relatively contained” since Gabon’s next significant bond payment isn’t due until 2025, when it must return around $605 million.
Another Moody’s analyst, Elisa Parisi Capone, said that the business was still reviewing the Niger downgrade.
Shortly after the coup in late July, the rating agency lowered Niger by two full notches and immediately placed it back under evaluation for another possible downgrade.
Generally speaking, Moody’s strives to complete its evaluation within 90 days, albeit it has the option to do so.
