The African Export-Import Bank (Afreximbank) has announced that Fitch Ratings has affirmed the bank’s 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 highlighted that Afreximbank’s ‘BBB-’ rating is driven by its intrinsic features, including solvency and liquidity, and adding that the ongoing and expected capital increases support the resilience of the bank’s solvency during the COVID-19 pandemic.
The agency noted that “the strong capitalisation is underpinned by the equity to assets guarantees ratio at 18.1 per cent in 2019, close to 2018 level (18.5 per cent) as the bank’s expansion has been broadly matched by paid-in capital payments from the ongoing $1 billion capital increase (targeted to be completed by end-2021, 91 per cent had been raised by end-H1 2020) and internal capital generation”.
Fitch further noted that a high level of loan collateralization (88 per cent of the facilities), credit insurances from ‘A’ rated insurers and hedging strategies on commodity backed facilities, have all helped the bank maintain a low impairment ratio of 2.4 per cent on a 10-year average, “despite its ‘high’ risk operating environment.”