The financial rating agency S&P Global Ratings has on Friday given the African Development Bank (AfDB) a short- and long-term credit rating of “AAA/A-1+” with a stable outlook, the Bank announced Monday.
S&P Global Ratings has given a “positive assessment of the AfDB’s risk profile,” as well as its capital adequacy, the soundness of its funding strategy and its level of liquidity. This is thanks to the strong support of its shareholders and the adequacy of its governance and management system.
Considering this, the financial rating agency has maintained the “AAA” rating of the AfDB’s long-term debt. This performance also remains strong following the historic increase in the Bank’s capital to 67,233 billion CFA francs in October 2019.
This stable outlook is also due to the replenishment of the African Development Fund and the concessional loan window of the African Development Bank (AfDB) Group in December 2019.
According to S&P Global, the rating reflects the bank’s forecast that “over the next two years, the AfDB will prudently manage its capital, while maintaining a high level of liquidity with a quality investment portfolio, and pursuing a sound funding strategy.”
The agency assured that “shareholders will continue to provide support by paying their contributions to the Bank’s capital according to schedule. This should allow the institution to benefit from the treatment accorded to preferred creditors, and to prudently manage the growth of private sector lending in line with its mandate.
With this financial strength, the rating agency believes that the bank will play a key role in supporting the region, particularly in the context of the Covid-19 pandemic which affected the economies of states and the corporate portfolio.
To mitigate the impact of the crisis related to the Covid-19 pandemic, the institution has approved emergency aid of up to $10 billion in 2020, of which $6.9 billion will be financed directly by the Bank and the rest through its concessional window.
“We welcome the decision by S&P Global Ratings to reaffirm the bank’s AAA/A-1+ rating. This decision reflects the institution’s strong financial strength, prudential risk management and good governance,” said AfDB President, Akinwumi Adesina.
Mr. Adesina pledged to “maintain the bank at this level of excellence,” with the full support of all shareholders, in order to provide regional member countries with essential funding, knowledge and policy support during the Covid-19 pandemic period.
AP/ls/lb/abj/APA