Afreximbank Downgraded by Fitch Ratings
The Fitch ratings agency has downgraded the African Export-Import Bank (Afreximbank) to speculative grade and withdrawn its future ratings, marking the final step in a relationship that has become increasingly contentious with the multilateral financial institution. Only Moody's, among the three major agencies, still rates the bank.
Downgrade from BBB- to BB+
This downgrade follows a dispute between the bank and Fitch over the agency's assessments, which had raised concerns about high credit risks, weak risk management policies, and the possibility of the institution suffering losses on its loans to member states.
Weakened Political Importance
In Fitch's view, the bank's inclusion in the debt restructuring of Ghana signaled a weakening of its political importance. The country announced a "resolution" of its $750 million loan from Afreximbank on December 25. The Paris Club of public creditors accepted this resolution, meaning the bank suffered a loss on the loan. Its risk profile has therefore changed from "medium" to "high".
Afreximbank Severs Ties with Fitch
Last week, Afreximbank announced that it would be severing ties with Fitch, citing its conviction that the agency's rating methodology no longer reflected an understanding of the bank's mission and mandate.
Future Credit Policy Uncertain
It remains to be seen whether the bank will review its credit policy towards member countries. Zambia is also set to conclude a debt restructuring agreement with Afreximbank, which has become essential for several countries on the continent, including Tunisia.
