FRANKFURT AM MAIN, Germany – Fitch Ratings announced Wednesday it has downgraded the African Export-Import Bank’s (Afreximbank) Long-Term Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BBB’, citing heightened solvency risks. The outlook remains negative.
The ratings agency also reduced Afreximbank’s Short-Term IDR to ‘F3’ from ‘F2’, and downgraded long-term ratings on the bank’s Global Medium-Term Note Programme and debt issuances to ‘BBB-‘ from ‘BBB’.
Fitch’s downgrade primarily reflects a revision of its solvency assessment from ‘a-‘ to ‘bbb+’, driven by an increase in credit risks and a less transparent approach to risk management. The bank’s non-performing loans (NPLs) ratio, as calculated by Fitch, surpassed the 6% “high risk” threshold at the end of 2024. Fitch reported the NPL ratio at 7.1% for end-2024, compared to Afreximbank’s reported 2.3% for the same period.
The agency noted “low transparency” in recent reporting of loan performance compared to other multilateral development banks, and highlighted that Fitch’s NPL definition differs from Afreximbank’s. Exposures to Ghana (2.4% of loans), South Sudan (2.1%), and Zambia (0.2%) were classified as non-performing by Fitch.
The negative outlook signifies the risk that debt owed to Afreximbank by some sovereign borrowers could be included in future debt restructuring efforts, potentially impacting Fitch’s assessment of the bank’s policy importance and strategic risk.
Afreximbank’s ratings are primarily driven by its Standalone Credit Profile (SCP) of ‘bbb-‘, which balances its “strong” capitalization with a “moderate” risk profile and a “high risk” business environment. While Fitch anticipates the NPL ratio to decline below 6% by the end of 2027 due to loan growth and expected repayments, it acknowledges the bank operates with significant collateral and credit risk mitigants.
Fitch also cited an increased business profile risk, stemming from exposure to a “high risk” operating environment and reduced transparency in loan performance reporting, leading to a “high risk” assessment for the quality of governance. Despite these challenges, Afreximbank maintains “strong” capitalization, supported by capital injections and internal capital generation. The average rating of its loan portfolio before mitigants was ‘CCC+’ in 2024, reflecting exposure to non-sovereign entities and sovereign borrowers with an average ‘B-‘ rating.
