Ghana gets its first Credit Rating Agency to provide credit rating and related services for the financial markets to operate efficiently. Beacon Credit Rating Agency (Beacon Ratings) was granted regulatory approval by the Securities and Exchange Commission (SEC) granted regulatory in accordance with Section 209 of the Securities Industry Act 2016 (Act 929) as revised by the Securities Industry Act 2021. A rating agency is an organisation that rates the financial health of businesses and governmental bodies, particularly their capacity to make principal and interest payments on loans. The rating assigned to a given debt shows an agency's level of confidence that the borrower will honour its debt obligations as agreed. Ghanaian financial institutions, investors, and fund managers have been relying on the ratings of international agencies to influence their investment decisions. Mr Paul Ababio, the Deputy Director-General for the SEC, speaking at the launch, said rating agencies played an important role in the financial market development of Ghana. He said emerging capital markets, including Ghana, were often characterised by increased volatility, a dynamic economic landscape, and rapid growth. He said the role of a rating agency was critical as it played a lead role in guiding both investors and entities to accurately price financial instruments and provide leadership on price determination. Mr Ababio said the financial markets provided a platform for corporate entities to raise capital directly from investors. He said there was a challenge in ensuring that investors had critical information about detailed assessments and analyses of an entity's ability to repay loans. 'The critical role played by credit ratings in an efficient financial market is conventional wisdom and by providing information on default risk and, therefore, on the likely future performance of an issuer, ratings contribute to the efficiency of the markets,' he added. He said ratings could help establish a more balanced information syst em in a market and with ratings, investors have an additional source of information that they could use to establish benchmarks for comparing risks and returns. Dr Justice Ofori, the Chief Executive Officer for the National Insurance Commission, in a speech read on his behalf, said the impact of risky rapid rating downgrades as a direct result of entities not being able to meet the expected level of financial stability could affect market perception. He said that this could lead to a loss of business as doubts may be entertained concerning the entity's ability to meet the financial commitments of investors. Mr Noble Yao Akaba, the Founder of Beacon Ratings Agency, said the rating agency would be impactful to the financial markets by bridging the gap between entities and investors. He said the rating agency would monitor the entity's performance, with upgrades and downgrades serving as signals to investors. He said the agency would be supporting portfolio managers in investment decisions and lenders in cr edit decisions. He said Beacon Ratings aimed to be a leading business analytic and rating agency in Africa and this vision would be achieved by enhancing the efficiency of the money and capital markets, by assessing corporate entities/ issuers and financial instruments. 'We reaffirm our commitment to delivering reliable and high-quality ratings with integrity, independence, and transparency,' he added. Source: Ghana News Agency