Moody’s Flags Afreximbank’s Credit Risks, Downgrades Ratings

By Adedapo Adesanya

The African Export-Import Bank (Afreximbank) has been hit with another downgrade, this time by Moody’s, another major international credit rating agency.

The United States-based rating agency downgraded the bank’s long-term issuer and senior unsecured ratings to Baa2 from Baa1. Baa1 implies a lower risk of default compared to Baa2.

However, Moody’s changed Afreximbank’s outlook to stable from negative.

The agency cited weaker asset performance and increased risks from sovereign lending—particularly to Ghana and Zambia—as reasons for the downgrade.

This downgrade follows a similar move by Fitch only four weeks ago, which generated controversies.

Lower rating means higher borrowing costs for Afreximbank, which could directly impact its ability to lend and the low rates at which it does so.

This won’t be the first time that Moody’s has flagged Afreximbank’s credit risks. It has already in a rating report issued in 2024, raised doubts about Afreximbank’s asset quality and performance.

Recall that Fitch in its report published in June, had estimated Afreximbank’s non-performing loans at 7.1 per cent by the end of 2024, exceeding Fitch’s 6 per cent “high risk” threshold.

The African Peer Review Mechanism (APRM) contested Fitch’s assessment and argued that Fitch confused loan restructuring requests from South Sudan, Zambia, and Ghana by considering them as defaults, claiming this was inconsistent with the 1993 treaty establishing Afreximbank.

Moody’s said that a sustained improvement in the operating environment that would support stronger asset performance and quality would likely exert upward pressure on the ratings, “as would an improved capital structure and/or market funding access”.