CAIRO, Egypt – The African Export-Import Bank (Afreximbank) on Tuesday challenged the negative outlook assigned by Fitch Ratings, stating its financial reporting adheres to global standards and asserting it will not participate in debt restructuring negotiations for its member countries. The statement came in response to Fitch’s June 4 downgrade of the bank’s Long-Term Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BBB’.
Afreximbank, based in Cairo, emphasized its financial reporting strictly complies with International Financial Reporting Standards (IFRS), including IFRS 9, which governs loan classification and non-performing loan (NPL) treatment. The bank highlighted Fitch’s own report acknowledged a divergence, stating, “Fitch’s definition of NPLs differs from the Bank’s approach, which makes use of forward-looking information.”
The pan-African institution underscored elements of its financial strength that it said were recognized by Fitch. These included its “strong capitalization,” featuring a “strong equity to assets and guarantees ratio” and “excellent internal capital generation.” Afreximbank also noted Fitch’s acknowledgement of its “high level of collateral and credit risk mitigants,” “low” concentration risk and an “a” liquidity assessment reflecting “strong quality of treasury assets.” These factors, Afreximbank asserted, reinforce the “overall soundness of the Bank’s risk management framework.”
Addressing the “negative outlook,” which Fitch attributed to the potential inclusion of Afreximbank’s debt in sovereign restructuring perimeters, the bank firmly rejected the premise. Afreximbank stated it “is not participating in debt restructuring negotiations related to any of its member countries.” It argued that its establishment agreement is a treaty among its 53 participating African states and the bank, and that participating in such restructurings would be “inconsistent with the Bank establishment treaty.”
The bank reaffirmed that the treatment of its loans and activities is governed by its treaty and “not by classifications created outside its framework.”
Afreximbank reiterated its commitment to its mandate of supporting member countries through economic challenges, promoting trade-led growth and fostering macroeconomic stability across Africa, citing its “financial resilience, robust governance and unwavering commitment to excellence, and to Africa.”
