Business Type: Credit rating agencies provide objective and independent opinions on the general creditworthiness of issuers of debt instruments and their ability to meet obligations in a timely manner. They assess relevant risk factors including the issuer’s ability to generate cash in the future.
Licensing Requirements: Must demonstrate capacity to perform the role of a rating agency, have background, experience, and professional expertise in credit rating, demonstrate independence, objectivity, and a proven rating methodology, be a body corporate with a preponderance of institutional shareholding of repute, have shareholders, board of directors, management, and professional analytical staff of impeccable character, be partly owned by or have a contractual arrangement with an internationally recognized rating agency for technical and strategic support, and have a minimum paid-up capital of KES 12 million.
Government Fees: Application fees are approximately KES 200,000, with annual renewal fees of around KES 120,000 to KES 150,000.
Timeline: The approval process typically takes 60 to 90 days, accounting for the assessment of methodologies, independence, and professional expertise.
Limitations: Credit rating agencies must disclose their rating methodologies, avoid conflicts of interest, maintain independence from rated entities, provide transparent and timely rating updates, and comply with international rating standards.
Penalties: Violations may result in public censure, fines, license suspension or revocation, and prosecution for providing fraudulent or misleading ratings.
Enforcement: The CMA reviews rating methodologies, conducts transparency audits, monitors potential conflicts of interest, and ensures compliance with international best practices for credit rating agencies.