Nigeria: Afreximbank and UTM Offshore to Develop Floating LNG Project

The global rating agency, Fitch Ratings, on 20 June 2023 affirmed the African Export-Import Bank’s (Afreximbank) Long-Term Issuer Default Rating (IDR) at ‘BBB’, with a Stable Outlook. Fitch also affirmed Afreximbank’s Short-Term Issuer Default Rating at ‘F2’ and the Long-Term ratings on the Bank’s Global Medium Term Note Programme and Debt Issuances at ‘BBB’. 

The rating affirmation is a strong testament of the Bank’s systemic relevance to Africa and captures the increasing number of the key mandates given to the Bank by the African Union (AU), such as the implementation of the health response to the COVID-19 pandemic and the support for access to grains and fertilizers in the context of the Russia-Ukraine conflict. 

Fitch acknowledged Afreximbank’s strong capital and liquidity position. In addition to the ‘excellent’ internal capital generation, the Bank had raised US$1.4 billion paid-in capital, as of 2022, out of the planned raise of US$2.6 billion by 2026. The agency noted that Afreximbank had a strong liquidity profile, as its share of treasury assets rated ‘AA’ to ‘AAA’ remained above the ‘strong’ threshold of 40 per cent. It added that the Bank’s liquidity profile was further enhanced by its access to capital markets and other alternative liquidity sources even during challenging times.  

The Bank has continuously demonstrated its ability to de-risk its lending portfolio, noted Fitch. With a low concentration risk, coupled with a high collateralisation of the loan book, where 25 per cent of the loan book was cash collateralised and eight per cent was credit insured from ‘A’ to ‘AA’ rated insurers, “the ‘moderate’ risk management policies primarily reflect the use of credit risk mitigants that have helped maintain a relatively low non-performing loan ratio, despite the high-risk environment that the bank operates in.” 

Commenting on the development, Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, said that Fitch’s affirmation is a strong testament to the Bank’s strong developmental mandate and its increasing countercyclical role in helping its member countries during challenging times. The Bank has continued to contribute and define the path for Africa’s economic future through the creation of programmes and initiatives that support the emergence of integrated and well diversified African economy that adapts and responds to global shocks. 

“The Bank’s consistent and prudent response to member countries’ needs during challenging times and its ability to manage exposures prudently have led to its recognition by member countries as a systemic institution as evidenced by its accreditation by the AU and its selection by the AU as a preferred partner in implementing some AU strategic initiatives,” noted the President.