The rating agency, Fitch rating, has affirmed the African Export-Import Bank (Afreximbank) long term Issuer Default Ratings (IDR) at ‘BBB-‘with a stable outlook. The agency also affirmed the Bank’s Short-term IDR at ‘F3’ and senior unsecured debt at ‘BBB-‘.
Fitch highlights strong solvency and liquidity coupled with ongoing and expected capital increases as drivers to the stable outlook. The rating agency expects Afreximbank to remain resilient during the COVID19 pandemic due to the strong capitalization.
Afreximbank equity to assets guarantees ratio stood at 18.1% in 2019, close to 2018 levels (18.5%). Furthermore, the bank’s expansion has been supported by paid-in capital payments from the ongoing $1 billion capital increase (targeted to be completed by end of 2021 with 91 percent having been raised by end-H1 2020) and internal capital generation.
Fitch adds that Afreximbank has maintained a low impairment ratio of 2.4% on a 10-year average due to high level of loan collateralization at 88% of the facilities, credit insurances from ‘A’ rated insurers and hedging strategies on commodity backed facilities.
The agency expects a recent endorsement by the Bureau of African Union Heads of States to allow the bank to increase its subscribed capital to support the resilience of the Bank’s solvency.
The African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution with the mandate of financing and promoting intra-and extra-African trade. Afreximbank was established in October 1993 and owned by African governments, the African Development Bank and other African multilateral financial institutions as well as African and non-African public and private investors.