Moody’s next move on Gabon’s credit rating following the country’s military coup this month will depend on its economic impact, while it is also working through another downgrade review of Niger following its coup there in late July.
The two countries have seen West and Central Africa’s seventh and eighth coups in the last three years, and while Niger’s Caa2 rating has already been cut by two full notches by Moody’s, the firm has maintained a “stable” outlook on its slightly higher Caa1 Gabon score for the time being. “The events around the coup are still very much evolving,”Micka Gondrand, Moody’s lead analyst for Gabon said.
“We seethe developments as credit negative and are continuing to monitor the situation.” He said the likelihood of economic and financial sanctions being imposed on Gabon, and what shape they would take, remained the big uncertainty at this early stage.
A meeting of heads of states of the Economic Community of Central African States remains pending. France and the United States and the African Union have all condemned the coup, with the latter suspending Gabon’s membership. The imposition of any sanctions would weigh on trade and investment, Gondrand said.
Net foreign direct investment inflows have been strong in recent years, averaging around 9% of GDP between 2016 and 2021, according to World Bank estimates. He added the coup was also likely to have an impact on the support it receives from the international community and could further hamper an already-wobbling International Monetary Fund programme.
“We think the programme, which has already seen delays, is likely to slow even further given the events,” he said.
Financing needs should stay “relatively contained” for the time being however as Gabon’s next major bond payment isn’t until 2025 when it has to repay around $605 million. On the firm’s Niger downgrade review, another of Moody’s analysts Elisa Parisi Capone said the process was ongoing. The ratings agency downgraded Niger by two full notches shortly after the late July coup and put it straight back on review for another potential downgrade. Moody’s generally tries to conclude its review within 90days, although it can extend them.
