Moody’s Downgrades Afreximbank Credit Rating on Weaker Asset Quality
Moody’s Ratings has downgraded the long-term issuer rating of the African Export-Import Bank (Afreximbank) from Baa1 to Baa2, citing weaker-than-expected asset performance and rising credit risks across its loan portfolio.
The move comes just a month after Fitch Ratings also revised its outlook on the multilateral lender, signalling growing concern among global credit assessors about the bank’s credit fundamentals.
Moody’s, in a statement issued on Tuesday, noted that the downgrade brings Afreximbank two notches above speculative-grade status commonly referred to as “junk”, a threshold that if breached, could significantly narrow the investor base eligible to hold the bank’s debt instruments.
The downgrade reflects the deterioration in the bank’s asset quality and increasing exposures to sovereign and quasi-sovereign borrowers in high-risk jurisdictions.
The Baa2 rating is accompanied by a stable outlook, suggesting that further negative rating actions are not immediately anticipated, although the bank remains vulnerable to external shocks and credit concentration risks.
Afreximbank, which plays a central role in financing intra-African trade and supporting member states’ liquidity needs, has significantly expanded its lending operations in recent years, including through emergency pandemic support and credit facilities tied to the African Continental Free Trade Area (AfCFTA).
The rating cut is likely to raise borrowing costs for the institution in international debt markets and may complicate its efforts to mobilise capital amid tightening global financial conditions.
