Unlike many countries around the world, Bhutan does not yet have sovereign or corporate credit ratings. These ratings provide an independent assessment of a country’s economic strength and credibility, helping attract global investment and access loans more easily.
When countries seek investment, or when investors decide where to place their money, they look for more than good ideas. They ask a simple question: Can this country or company be trusted?
To answer that, investors rely on sovereign and corporate credit ratings.
“A sovereign rating is typically an independent assessment of a country’s ability and willingness to service its debt on time. Many global investor mandates either require or strongly prefer rated sovereigns or bonds. As a result, a sovereign rating can expand Bhutan’s potential investor base beyond official and bilateral lenders,” said Akash Jain, the director and head of the corporate affairs and strategic partnership at CareEdge Global IFSC, India.
Because Bhutan remains unrated, investment prospects for both the country and its companies often suffer.
This gap was the focus of a roundtable discussion titled ‘Sovereign and Global Ratings: Trust and Transparency’ held in Thimphu.
Dorji Phuntsho, the CEO of RSEBL said, “In terms of fundraising, if the issuer gets rated and the rating is strong, they can access funds at a cheaper rate. Not only that, but it also boosts investor confidence, and in terms of transparency and market reach, the rating is going to help companies achieve that.”
Experts at the discussion warned that remaining unrated could increasingly hold Bhutan back, particularly as the country pursues its ambitious 10x economic vision.
In July last year, the Royal Securities Exchange of Bhutan Limited signed a memorandum of understanding with CareEdge Global, India’s second-largest credit rating agency. The agreement aims to promote knowledge sharing and introduce global credit ratings for Bhutanese banks and companies.
Akash Jain said, “Last year, I had the privilege of signing an MoU on behalf of CareEdge Global with RSEBL, the stock exchange of Bhutan. The idea was to build this ecosystem and deepen the capital market. We certainly look forward to exploring the sovereign rating of Bhutan, as well as some of the conglomerates and large banks.”
CareEdge Global says it is already in discussions with Bhutanese companies to conduct corporate credit ratings. However, a sovereign credit rating would require approval from the government.
An official from the Royal Monetary Authority said efforts to establish a credit rating system began in 2014, but earlier attempts were unsuccessful.
Under the new foreign direct investment rules, full foreign ownership is now allowed for setting up a credit rating agency, making it easier to bring in international expertise.
Kinley Bidha
Edited by Sangay Chezom
