Fitch affirms Afreximbank’s rating at ‘BBB’, outlook stable

BUSINESS REPORTER

Global ratings agency Fitch has affirmed the African Export-Import Bank’s (Afreximbank) long-term issuer default rating at ‘BBB’, with a stable outlook.

The ratings agency also affirmed Afreximbank’s short-term issuer default rating at ‘F2’ and the Long-Term ratings on the Bank’s Global Medium Term Note Programme and Debt Issuances at ‘BBB’.

Benedict Oramah, Afreximbank’s president and chairman of the board, said the Fitch’s affirmation is a “strong testament” to the bank’s strong developmental mandate and its increasing countercyclical role in helping its member countries during challenging times.

“The bank has continued to contribute and define the path for Africa’s economic future through the creation of programmes and initiatives that support the emergence of integrated and well diversified African economy that adapts and responds to global shocks,” Oramah said.

 

“The Bank’s consistent and prudent response to member countries’ needs during challenging times and its ability to manage exposures prudently have led to its recognition by member countries as a systemic institution as evidenced by its accreditation by the AU and its selection by the AU as a preferred partner in implementing some AU strategic initiatives.”

Fitch acknowledged Afreximbank’s strong capital and liquidity position. In addition to the ‘excellent’ internal capital generation, Afreximbank had raised US$1.4bn in paid-in capital, as of 2022, out of the planned US$2.6bn by 2026.

The ratings agency said the bank had a strong liquidity profile, as its share of treasury assets rated ‘AA’ to ‘AAA’ remained above the ‘strong’ threshold of 40%.

It added that the Afreximbank’s liquidity profile was further enhanced by its access to capital markets and other alternative liquidity sources even during challenging times.

Afreximbank has continuously demonstrated its ability to de-risk its lending portfolio, Fitch said.

With a low concentration risk, coupled with a high collateralisation of the loan book, where 25% of the loan book was cash collateralised and 8% was credit insured from ‘A’ to ‘AA’ rated insurers, “the ‘moderate’ risk management policies primarily reflect the use of credit risk mitigants that have helped maintain a relatively low non-performing loan ratio, despite the high-risk environment that the bank operates in.”

Fitch said the increasing number of key mandates given to Afreximbank by the African Union was further evidence of the bank’s “strong profile”.

Some of the mandates include implementing the health response to the Covid-19 crisis and supporting access to grains and fertilisers in the context of the Russia-Ukraine conflict.

 

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