S&P Affirms AAA/A-1+ Ratings on AfDB
By Adedapo Adesanya
Standard & Poor’s (S&P) Global Ratings has affirmed its ‘AAA/A-1+’ long- and short-term issuer credit ratings on the African Development Bank (AfDB).
The rating agency in its latest rating positively assessed the bank’s very strong financial risk profile, very strong capital adequacy, strong funding and liquidity, extraordinary shareholder support and adequacy of its governance and management.
The global rating agency also stated that the outlook of the Abidjan-based multilateral institution remains stable.
“We are therefore affirming our ‘AAA’ long-term issuer credit rating on the AfDB,” S&P Global stated.
The rating agency noted the bank’s $115 billion capital increase, approved by shareholders in October 2019, and the replenishment to the African Development Fund, and the bank’s concessional window, in December 2019.
“The stable outlook reflects our expectation that, over the next two years, AfDB will prudently manage its capital while maintaining solid levels of high-quality liquidity assets and robust funding,” S&P Global said in a statement.
S&P expects that “shareholders will remain supportive by providing timely capital payments”; the Bank “will continue benefiting from preferred creditor treatment (PCT); and “prudently manage growth in private-sector lending in a way that’s aligned with its mandate.”
The rating agency’s report further noted that the “AfDB will play a key role supporting the region, particularly in the context of COVID-19.
“The institution approved an up to $10 billion relief package for 2020, of which $6.9 billion will be financed by AfDB and the remainder through its concessional lending window.”
Speaking on the rating, the President of the bank, Mr Akinwumi Adesina, said, “We are delighted with and welcome S&P Global’s decision to affirm the Bank’s AAA/A-1+ rating. It reflects the bank’s very strong financial position and risk management, as well as our sound governance.
“We will continue to maintain these standards, with the strong support of all our shareholders, as we deliver much needed financial, knowledge and policy support to our regional member countries during and after this period of the COVID-19 pandemic.”
The agency also commented on the allegations against the President of AfDB. The New York-based rating agency pointed out that the bureau of the boards of governors of the bank recently addressed allegations against the president, agreeing with the findings of the ethics committee absolving the president of any wrongdoing and authorising an independent review of the report.