Moody's assigns B2 first-time issuer rating to Cameroon

Credit rating agency Moody’s has assigned a first-time local and foreign-currency issuer ratings of B2 to Cameroon with a stable outlook.

According to Moody’s, Cameroon has a low economic strength balancing the country’s exposure to the oil shock—although more contained than for regional peers— but there is expectation of a stronger potential growth outlook which is supported by the infrastructure investment strategy aimed at unlocking the country’s vast resource potential.

Moody’s said its assessment took into account the gradually slowing oil production outlook and the lower for longer commodity price environment which dampens incentives for the development of the country’s significant natural gas resources.

Cameroon’s oil production peaked in 1985 at over 180,000 barrels per day (bpd) and has been on a declining trend over the past decades due to depletion of mature oil fields, although new wells and recovery techniques for mature oil fields have temporarily boosted oil production, partially offsetting the impact of lower oil prices. The oil sector accounted for 7% of GDP in 2014, for 50% of total exports and for 23% of fiscal revenues.

Moody’s notes that Cameroon has a low institutional strength which it says is challenged in particular by weak control of corruption and public financial management, but supported by membership of the Central African Economic and Monetary Union (CEMAC) which affords it a high degree of monetary policy credibility.

The rating agency noted that the country is susceptible to political risk posed by the succession stemming from President Paul Biya’s long tenure of more than 30 years.

Concurrent with the first-time rating assignment, Moody’s also assigned a Ba2 ceiling for both local and foreign-currency bonds and deposits.