Fitch Ratings has downgraded African Export-Import Bank’s (Afreximbank) long-term issuer credit rating, citing rising restructuring risk and a reassessment of the lender’s policy importance, before subsequently withdrawing all ratings and ending analytical coverage of the bank.
- •The ratings agency said the downgrade reflects its view that Afreximbank’s role as a policy-driven institution has weakened, prompting a reassessment of its overall business profile and operating environment.
- •Fitch now classifies the bank’s business profile risk as high, pointing to the elevated credit and political risks across many of the markets in which Afreximbank operates.
- •Afreximbank had already announced that it has terminated its credit rating relationship with Fitch, arguing that the agency’s assessment does not adequately reflect the bank’s legal protections, establishment agreement and development mandate.
According to Fitch, the reassessment marks a shift from earlier assumptions that African multilateral lenders benefit from implicit preferential treatment in sovereign debt situations. The agency said recent developments suggest Afreximbank can no longer be viewed as insulated from restructuring risk, a factor that weighed heavily on its rating decision.
In a statement, Fitch noted that while the bank continues to benefit from strong capital buffers and solid liquidity, these strengths are offset by higher business, governance and operating environment risks. The agency highlighted Afreximbank’s exposure to jurisdictions with weak credit quality, low income levels and elevated political risk, which it said increases volatility in asset quality and earnings over time.
"Fitch has chosen to withdraw the ratings for commercial reasons. Fitch will no longer provide ratings or analytical coverage for the bank," the credit ratings agency said.
While announcing the end of its relationship with Fitch Ratings on January 23rd, Afreximbank said its business model remains robust, underpinned by strong shareholder relationships and treaty-based protections ratified by its member states, and reaffirmed its commitment to supporting intra-African trade and development financing.
