Fitch Rating Agency Affirms AfDB At ‘AAA’ Stable Outlook.
Omotayo Araoye
Fitch Ratings, a global credit rating agency, has affirmed the African Development Bank’s (AfDB) Long-Term Issuer Default Rating (IDR) at ‘AAA’, with a stable outlook, following an earlier affirmation of the ‘AAA’ rating of the Bank, with a stable outlook, by Standard and Poor’s Global Ratings.
According to the agency, “the ‘AAA’ rating of the AfDB is driven by extraordinary support it receives from its shareholders, which Fitch Ratings assess at ‘aaa’”. It judged the Bank’s risk management policies as conservative and excellent in line with ‘AAA’ rated regional peers.
Fitch Ratings assessed “the Bank’s liquidity profile at ‘aaa’, reflecting an ‘excellent’ liquidity buffer and quality of liquid assets”, while “the bank’s capitalization is judged strong reflecting strong equity-to-assets ratio”. It also judged the Bank’s risk management policies as conservative and excellent in line with ‘AAA’ rated regional peers
The rating agency “assumes a 125% in subscribed capital from 2021 as per the Bank’s 7th General Capital Increase plan approved in October 2019”, noting that it “expects all non-regional shareholders will make their first payments before October 2021”.
In April 2020, the Bank’s Board of Directors approved a group-wide up to $10 billion COVID-19 Response Facility to be made available to current borrowers to ease the economic impact of the COVID-19 crisis.
Commenting on the development, President of the African Development Bank, Dr. Akinwumi Adesina, said, “We are delighted with the affirmation of the ‘AAA’ rating of the Bank, with a stable outlook, by Fitch Ratings, despite the global and regional economic challenges from the COVID-19 pandemic. We will continue to strengthen our policy relevance to support regional member countries, especially during and after the period of COVID-19, while ensuring that we maintain our prudential ratios with adequate buffers”.
Adesina added, “The Bank will continue to apply strong risk management. We are positive that African countries’ economies will recover as the pandemic subsides and Africa returns to a positive GDP growth trajectory,”.
Also, The Vice President for Finance and Chief Finance Officer at the African Development Bank, Swazi Tshabalala, stated that “The strong support of our shareholders will continue to be critical to allow the Bank to continue to play its leading role in supporting development in Africa,”
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