The African Export-Import Bank’s (Afreximbank) Long-Term Issuer Default Rating (IDR) has been affirmed by the international rating agency, Fitch Ratings, at “BBB,” with a Stable Outlook.
Fitch also affirmed Afreximbank’s Long-Term Ratings on the Bank’s Global Medium Term Note Program and Debt Issuances at ‘BBB’ and Short-Term Issuer Default Rating at ‘F2’.
The affirmation of the Bank’s rating is a strong demonstration of its systemic importance to Africa and captures the growing number of important mandates given to the Bank by the African Union (AU).
These mandates include the implementation of the health response to the COVID-19 pandemic and the support for access to grains and fertilizers in the context of the conflict between Russia and Ukraine.
Afreximbank’s solid capital and liquidity position was recognized by Fitch. In addition to its “excellent” internal capital creation, the Bank has raised US$1.4 billion of its target US$2.6 billion in paid-in capital.
The agency highlighted that Afreximbank’s proportion of treasury assets with ratings of “AA” to “AAA” remained above the “strong” criteria of 40%, indicating that the bank maintained a good liquidity profile. It further said that even in difficult circumstances, the Bank’s access to capital markets and other alternative liquidity sources improved its liquidity profile.
The Bank has consistently shown that it can reduce the risk in its loan portfolio, according to Fitch. With a low concentration risk and high loan book collateralization—25% of which was cash-collateralized and 8% of which was credit-insured by insurers with a “A” or “AA” rating—”the moderate” risk management policies primarily reflect the use of credit risk mitigants, which have helped maintain a comparatively low non-performing loan ratio despite the high-risk environment the bank operates in.”
Meanwhile, Afreximbank’s President and Chairman of the Board of Directors, Prof. Benedict Oramah, commented on the development and said Fitch’s confirmation was a significant tribute to the Bank’s strong development mandate and its growing countercyclical role in assisting its member nations.