The African Export-Import Bank’s (Afreximbank) Long-Term Issuer Default Rating (IDR) has been confirmed by the international rating agency Fitch Ratings at “BBB,” with a stable outlook.
Fitch 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’.
The rating affirmation is a strong testament of the bank’s systemic relevance to Africa and captures the increasing number of the key mandates given to the bank by the African Union (AU), such as 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 Russia-Ukraine conflict.
Recently, the Afreximbank held an annual meeting to deliberate the necessity for Africa to increase intra-African trade and integration in response to the COVID-19 pandemic’s effects, and the adverse economic problems brought on by the Ukraine and other international crises.
The bank disclosed its commitment to play a significant role in developing and implementing solutions to address the challenges confronting Africa, and expressed the hope that AAM2023 would lead to even more constructive solutions to Africa’s problems.
Afreximbank’s solid capital and liquidity position was recognized by Fitch. In addition to the ‘excellent’ internal capital generation, the bank had raised US$1.4 billion paid-in capital, as of 2022, out of the planned raise of US$2.6 billion by 2026.
The agency noted that Afreximbank had a strong liquidity profile, as its share of treasury assets rated ‘AA’ to ‘AAA’ remained above the ‘strong’ threshold of 40 per cent.
It added that the Bank’s liquidity profile was further enhanced by its access to capital markets and other alternative liquidity sources even during challenging times.
Fitch Commends Afreximbank Consistency In Its Activities
According to Fitch, the bank has consistently shown that it can de-risk its lending portfolio.
Despite the high-risk environment in which the bank operates, the “moderate” risk management policies primarily reflect the use of credit risk mitigants, which have helped maintained a relatively low non-performing loan ratio, thanks to the low concentration risk and high collateralization of the loan book, where 25% of the loan book was cash collateralized.
Afreximbank’s president and chairman of the board of directors, Prof. Benedict Oramah, commented on the development by saying that Fitch’s affirmation is a strong testament to the bank’s strong development mandate and its growing countercyclical role in aiding its member countries during trying times.
According to him, 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.
“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.”
Prof. Benedict Oramah
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