Economy

Fitch Affirms AfDB’s Triple ‘A’ Rating With Stable Outlook

Published

8 years ago

17/08/2017

By Modupe Gbadeyanka

Renowned global rating agency, Fitch Ratings, has affirmed the African Development Bank’s (AfDB) Long-Term Issuer Default Rating (IDR) at ‘AAA’ with a Stable Outlook and its Short-Term IDR at ‘F1+’ (best quality grade, indicating exceptionally strong capacity to meet its financial commitments).

Fitch, in a recent statement, disclosed that the ‘AAA’ rating primarily reflects extraordinary support from AfDB’s shareholders which provides a three-notch uplift over the Bank’s intrinsic rating.

It specifically said, “AfDB enjoys strong support from its 80 member states, which include 26 non-African countries with high average ratings.

“Callable capital subscribed by member states rated ‘AAA’, the largest of which are the US, Germany and Canada, accounts for 21 percent of the total.

“This fully covered the Bank’s net debt at end-2016, underpinning the ‘aaa’ assessment of shareholders’ capacity to support.”

The report underscores the strong propensity of member states to support the Bank in case of need as illustrated by previous capital increases and the Bank’s important role in the region’s financing.

In the assessment, Fitch maintains that fast growth in AfDB’s lending in the last two years has translated into a rapid increase in its indebtedness, noting that the bank’s management has indicated that if there is no clear evidence of a capital increase within the next two years, it will have no choice but to curb lending growth to preserve the Bank’s solvency metrics.

The report added that if no capital increase is approved by 2019, debt will not be fully covered by callable capital from ‘AAA’ rated countries, adding that this would place substantial pressure on Fitch’s assessment of extraordinary support and, hence on AfDB’s IDR.

Fitch asserts that the relatively high risk profile of borrowers is mitigated by the preferred creditor status (PCS) that the Bank enjoys on its sovereign exposures.

Fitch assesses AfDB’s liquidity at ‘AAA’, which reflects excellent coverage of short-term debt by liquid assets (2.9x).

However, Fitch notes that the share of the portfolio invested in securities or bank placements rated ‘AA-‘ or above (83 percent in 2016) is declining, although their quality is still assessed at excellent.

Fitch understands that management intends to rebalance the treasury assets portfolio in order to increase the proportion of assets rated ‘AA-‘ or above.

This would help underpin Fitch’s assessment of the strength of extraordinary support, given the relevance of liquid assets’ quality to the net debt calculation.

“The -1 notch adjustment to AfDB’s solvency stemming from our assessment of its business environment reflects the high risk operating environment in which the bank operates,” the report says, noting that the majority of African countries are classified as low income by the World Bank.

The average income per capita and average rating of member states are the lowest of all regional MDBs, and they are subject to an overall high level of political risk.

Commenting on the rating, AfDB Acting Vice-President for Finance, Hassatou Diop N’Sele, said, “We welcome the confirmation of the AfDB’s AAA rating by Fitch, with a stable outlook. The Bank is dedicated to doing the most to make a marked positive difference in the lives of hundreds of millions of Africans, while at the same time preserving its financial integrity.

“Our High 5 agenda is our response to the need to accelerate and scale up Africa’s development to achieve the Sustainable Development Goals of the continent. The High 5 agenda, reflecting five identified priority areas (namely energy, agriculture, industrialization, integration and human capital development), enjoys strong support from our shareholders.

“The AfDB will continue to maintain a careful balance between maximizing its development effectiveness and assuring complete preservation of the interests of its stakeholders.”

Economy

Tinubu Presents N58.47trn Budget for 2026 to National Assembly

Published

6 hours ago

19/12/2025

Adedapo Adesanya

By Adedapo Adesanya

President Bola Tinubu on Friday presented a budget proposal of N58.47 trillion for the 2026 fiscal year titled Budget of Consolidation, Renewed Resilience and Shared Prosperity to a joint session of the National Assembly, with capital recurrent (non‑debt) expenditure standing at 15.25 trillion, and the capital expenditure at N26.08 trillion, while the crude oil benchmark was pegged at $64.85 per barrel.

Business Post reports that the Brent crude grade currently trades around $60 per barrel. It is also expected to trade at that level or lower next year over worries about oil glut.

At the budget presentation today, Mr Tinubu said the expected total revenue for the year is N34.33 trillion, and the proposal is anchored on a crude oil production of 1.84 million barrels per day, and an exchange rate of N1,400 to the US Dollar.

In terms of sectoral allocation, defence and security took the lion’s share with N5.41 trillion, followed by infrastructure at N3.56 trillion, education received N3.52 trillion, while health received N2.48 trillion.

Addressing the lawmakers, the President described the budget proposal as not “just accounting lines”.

“They are a statement of national priorities,” the president told the gathering. “We remain firmly committed to fiscal sustainability, debt transparency, and value‑for‑money spending.”

The presentation came at a time of heightened insecurity in parts of the country, with mass abductions and other crimes making headlines.

Outlining his government’s plan to address the challenge, President Tinubu reminded the gathering that security “remains the foundation of development”.

He said some of the measures in place to tame insecurity include the modernisation of the Armed Forces, intelligence‑driven policing and joint operations, border security, and technology‑enabled surveillance and community‑based peacebuilding and conflict prevention.

“We will invest in security with clear accountability for outcomes—because security spending must deliver security results,” the president said.

“To secure our country, our priority will remain on increasing the fighting capability of our armed forces and other security agencies by boosting personnel and procuring cutting-edge platforms and other hardware,” he added.

Economy

PenCom Extends Deadline for Pension Recapitalisation to June 2027

Published

15 hours ago

19/12/2025

Aduragbemi Omiyale

By Aduragbemi Omiyale

The deadline for the recapitalisation of the Nigerian pension industry has been extended by six months to June 2027 from December 2026.

This extension was approved by the National Pension Commission (PenCom), the agency, which regulates the sector in the country.

Addressing newsmen on Thursday in Lagos, the Director-General of PenCom, Ms Omolola Oloworaran, explained that the shift in deadline was to give operators more time to boost the capital base, dismissing speculations that the exercise had been suspended.

“The recapitalisation has not been suspended. We have communicated the requirements to the Pension Fund Administrators (PFAs), and we expect every operator to be compliant by June 2027. Anyone who is not compliant by then will lose their licence,” Ms Oloworaran told journalists.

She added that, “From a regulatory standpoint, our major challenge is ensuring compliance. We are working with ICPC, labour and the TUC to ensure employers remit pension contributions for their employees.”

The DG noted that engagements with industry operators indicated broad acceptance of the policy, with many PFAs already taking steps to raise additional capital or explore mergers and acquisitions.

“You may see some mergers and acquisitions in the industry, but what is clear is that the recapitalisation exercise is on track and the industry agrees with us,” she stated.

PenCom wants the PFAs to increase their capital base and has created three categories, with the first consists operators with Assets Under Management of N500 billion and above. They are expected to have a minimum capital of N20 billion and one per cent of AUM above N500 billion.

The second category has PFAs with AUM below N500 billion, which must have at least N20 billion as capital base.

The last segment comprises special-purpose PFAs such as NPF Pensions Limited, whose minimum capital was pegged at N30 billion, and the Nigerian University Pension Management Company Limited, whose minimum capital was fixed at N20 billion.

Economy

Three Securities Sink NASD Exchange by 0.68%

Published

15 hours ago

19/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Three securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.68 per cent on Thursday, December 18.

According to data, Central Securities Clearing System (CSCS) Plc led the losers’ group after it slipped by N2.87 to N36.78 per share from N39.65 per share, Golden Capital Plc depreciated by 77 Kobo to end at N6.98 per unit versus the previous day’s N7.77 per unit, and FrieslandCampina Wamco Nigeria Plc dropped 19 Kobo to sell at N60.00 per share versus Wednesday’s closing price of N60.19 per share.

At the close of business, the market capitalisation lost N16.81 billion to finish at N2.147 billion compared with the preceding session’s N2.164 trillion, and the NASD Unlisted Security Index (NSI) declined by 24.76 points to 3,589.88 points from 3,614.64 points.

Yesterday, the volume of securities bought and sold increased by 49.3 per cent to 30.5 million units from 20.4 million units, the value of securities surged by 211.8 per cent to N225.1 million from N72.2 million, and the number of deals jumped by 33.3 per cent to 28 deals from 21 deals.

Infrastructure Credit Guarantee Company (InfraCredit) Plc remained the most traded stock by value with a year-to-date sale of 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.

Similarly, InfraCredit Plc ended as the most traded stock by volume on a year-to-date basis with 5.8 billion units traded for N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units exchanged for N524.9 million.