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Cytonn drops ratings agency after CMA starts regulating funds

Edwin Dande
Cytonn CEO Edwin Dande. FILE PHOTO | NMG 

Investment fund Cytonn has dropped its credit rating arrangement for its funds with South African agency GCR after they came under regulation by the Capital Markets Authority (CMA).

In December 2018, Cytonn Asset Managers were granted a licence to manage retirement benefit schemes funds by the Retirement Benefits Authority (RBA).

CMA then licensed Cytonn Asset Managers Limited (CAML) in March 2019, and even granted a Real Estate Investment Trust (REIT) Manager licence to the company.

CMA consented for CAML to proceed and register a number of unit trust funds — the Cytonn Africa Financial Services Fund, Cytonn USD Money Market Fund and Cytonn High Yield Fund.

“We abandoned GCR ratings in 2019 which cost $40,000 (Sh4 million) per year upon obtaining regulation status in 2019. Pension funds usually either invest in regulated or rated funds, so we rated the group to back our private funds,” said Cytonn CEO Edwin Dande.

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“It took time to get regulated but once regulated there was no need for ratings. No fund manager is rated,” he said.

GCR said they had withdrawn Cytonn’s ratings last year which stood at B (Ke) for long and short issues.

“GCR will no longer provide analytical coverage on the issuer. The long and short-term national scale Issuer ratings of B (KE)/B (KE) respectively could not be reviewed before withdrawal, due to the absence of sufficient information, and were last updated in November 2018,” GCR said.

Cytonn and the Capital Markets Authority are, however, locked in a tussle over the trusteeship of the company’s funds with the investment fund pushing for liberalisation of the market to allow it to appoint a non-bank trustee.

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