GCR upgrades Afreximbank rating to BBB+

Global Credit Rating (GCR) has said that it has upgraded African Export-Import Bank’s (Afreximbank) long-term international scale rating from BBB+ to A-. GCR also affirmed the Bank’s short-term rating at A2 and the outlook as stable. In the announcement released in Johannesburg, South Africa, yesterday, the rating agency said that, in granting the upgrade, it acknowledged Afreximbank’s tenacity and resilience in managing risks in its operating environment, which was generally perceived to be high risk. “The ratings on Afreximbank balances its significant exposure to high risk operating environments, fairly strong and diverse membership base, demonstrated preferential creditor treatment, strong status within the region and good track record of fulfilling mandate, beyond adequate current levels of capitalisation, strong risk position, stable funding and good liquidity position,” stated GCR.

According to agency, the new rating also captures the Bank’s key strength in structured trade finance which demonstrates its ability to de-risk its lending portfolio through high quality collateral comprising cash, insurance from highly-rated insurers, sovereign backed securities, assignment of receivables (which transfers repayment risk to OECD countries), amongst others. “This upgrade confirms stakeholders’ deep confidence in Afreximbank’s compelling credit story, which is punctuated by hard work and an innovation culture,” said Afreximbank President Prof. Benedict Oramah, in reaction to the announcement. “Afreximbank is committed to continuing to develop and implement innovative risk management approaches in the management of its lending book and capital.”

Prof. Oramah described the upgrade as a major milestone in the Bank’s history and said that, coming half way into the implementation of the Bank’s current strategic plan, it supported the fulfilment of one of the overarching pillars of that plan, which was financial soundness, by positioning it to leverage competitive financial resources into the Africa. Apart from enabling the Bank to competitively leverage international capital and having a positive impact on its reputation, the upgrade is expected to aid the Bank in rolling out its non-funded programmes, such as the Afreximbank Guarantee Programme, and to help it promote trade with reduced strain on capital. It will also help position the Bank to play a major role in the development of intra-African trade and in trade between Africa and the rest of the world.