S&P Global Ratings has restored the African Export-Import Bank (Afreximbank) to investment grade, nearly 12 years after its last assessment, citing the entity’s countercyclical lending record and \u200cstrong shareholder support.<\/p>\n
<\/p>\n
The BBB+ rating with a stable outlook is one notch above Moody’s Baa2 and comes months after Afreximbank severed ties with Fitch Ratings, accusing the agency of misjudging its mission following a downgrade to junk status amid disagreements over the bank’s role in debt restructurings for Ghana and Zambia.<\/p>\n
<\/p>\n
Fitch subsequently withdrew its ratings entirely and flagged governance concerns.<\/p>\n
<\/p>\n
Announcing its decision, S&P said in a statement on Thursday that Afreximbank’s record as a countercyclical lender and its substantial shareholder \u2060support served as rationale for its rating.<\/p>\n
<\/p>\n
The lender’s total assets, S&P noted, had expanded to $42.3 billion by end-2025, up from $7.1 billion in 2015.<\/p>\n
<\/p>\n
Credit ratings often guide the costs of capital for a borrower.<\/p>\n
<\/p>\n
DEBATE OVER STATUS<\/p>\n
<\/p>\n
Afreximbank has been at the centre of a debate over lenders’ eligibility for “preferred creditor status” – commonly granted to multilateral institutions such as the International Monetary Fund and World Bank, which shields them from losses during sovereign debt restructurings.<\/p>\n
<\/p>\n
Unlike those institutions, Afreximbank’s mix of public and private shareholders complicates its claim to that status.<\/p>\n
<\/p>\n
S&P said it did not incorporate preferred creditor status into its assessment on the grounds that Afreximbank provides almost 80% of its loans to private-sector entities.<\/p>\n
<\/p>\n
However, it acknowledged that Afreximbank, alongside other institutions, had experienced prolonged payment arrears in \u200crecent \u2060years, notably following the defaults and debt restructurings in Ghana and Zambia.<\/p>\n
<\/p>\n
S&P noted that Afreximbank said in December that it had come to an agreement with Ghana on its $750 million loan, but that the lender had not announced a resolution with Zambia.<\/p>\n
<\/p>\n
The agency warned that further sovereign restructurings could weigh on Afreximbank’s asset quality.<\/p>\n
<\/p>\n
Cairo-headquartered Afreximbank did not immediately respond to a request for comment.<\/p>\n
<\/p>\n
QUESTIONS ON GOVERNANCE<\/p>\n
<\/p>\n
Fitch, in its January \u2060downgrade and withdrawal notice, said Afreximbank’s reporting of the performance of loans was weaker than peers, leading it to assess the quality of governance as a “high” risk.<\/p>\n
<\/p>\n
It also said a high share of capital ownership by borrowing countries with weak credit fundamentals had created pressure to \u2060increase lending at the expense of prudent growth objectives.<\/p>\n
<\/p>\n
Afreximbank said at the time its business profile remained robust, underpinned by strong shareholder relationships and the legal protections embedded in its establishment agreement.<\/p>\n
<\/p>\n
S&P’s assessment described Afreximbank’s governance and management as “adequate”, saying the \u2060inclusion of two independent directors and the African Development Bank as a permanent board member provided institutional oversight.<\/p>\n
<\/p>\n
It noted that while increasing participation of private-sector investors through Class D shares could influence the bank’s risk appetite, Class A shareholders retained veto rights over big institutional changes, balancing potential risk.<\/p>\n
<\/p>\n
–Reuters–<\/p>\n
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