GCR affirms the A- international scale long term issue rating on Senior Unsecured Notes issued under the Global Medium Term Note Programme
Credit Rating Action
Johannesburg, 13 May 2021 – GCR Ratings (‘GCR’) has affirmed the A- international scale long term issue rating on the Senior Unsecured Notes issued by African Export-Import Bank (‘Afreximbank’, ‘the Issuer’) under its USD5bn Global Medium Term Note Programme (“GMTNP”), with outlook accorded as Stable.
Rated Entity / Issue
Outlook / Watch
USD 5bn Global Medium Term Note Programme
Long term issue
The Notes issued under the GMTNP are unsecured and unsubordinated obligations of the Issuer and rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations of the Issuer. Therefore, the Notes attract the Issuer’s long-term international scale rating. The Issuer’s credit rating is A-/A2 in the long and short term respectively, which GCR affirmed and accorded a Stable outlook in July 2020.
The ratings on Afreximbank are supported by its strong status as one of the largest Multilateral Development Banks within the African region, diverse regional membership, strong mandate and track record, demonstrated preferential creditor treatment, beyond adequate capitalisation, strong risk position, diverse funding and robust liquidity. The ratings also factor in the growing track record of the Bank carrying out its countercyclical role, especially in light of the current global COVID-19 pandemic. The ratings are however constrained by the significant exposure to high risk operating environments and the relative overall creditworthiness of its member states.
The outlook on the programme and the notes are stable reflecting the rating outlook of the issuer, which in turn reflects our opinion that the Bank has capacity to carry out its mandate in light of the pandemic, supported by a strong balance sheet. We also factor in the relevance and importance of the Bank to its shareholders which we think remains high. Sustained low credit losses, coupled with capital and liquidity managed within adequate to strong levels also supports a stable outlook.
There is limited upside movement to the rating over the outlook horizon outside sustained higher capital levels. However, we may lower the ratings should we see significant reduction in the operating environment, a reduced countercyclical role, credit losses above our expectations, GCR capital ratio managed below 15%, and or deteriorating funding and liquidity position.
Financial Institutions Analyst
+27 11 784 1771
Group Head of Ratings
+27 11 784 1771
Related Criteria and Research
Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Supranational Institutions, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, March 2021
GCR Financial Institutions Sector Risk Scores, February 2021
USD 5bn Global Medium Term Note
Long and Short-Term issuer
Salient Points of Accorded Ratings
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
The credit rating has been disclosed to African Export-Import Bank. The rating above was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the rating.
African Export-Import Bank participated in the rating process via virtual management meetings, and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible. The information received from African Export-Import Bank and other reliable third parties to accord the credit rating included:
Audited financial results of African Export-Import Bank as at 31 December 2019; and
Base Offering Memorandum relating to the USD5bn GMTN dated 30 April 2021.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.
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