Moody’s downgraded the African Export–Import Bank (Afreximbank), citing heightened credit risks tied to ongoing debt workouts involving Zambia and Ghana.
The cut brings the bank’s debt rating even closer to junk territory, Bloomberg reported.
It follows similar move earlier by Fitch, which downgraded Afreximbank to just one notch above default status in June.
Both agencies likened the downgrade to mounting concerns over the bank’s exposure to sovereign loan restructuring and its weakened risk management.
Also Read: Moody’s Gives Reasons for Updating Kenya’s Credit Outlook to Positive
Key Reasons Behind the Downgrade:
- Sovereign exposure: Moody’s flagged the bank’s significant lending to Zambia and Ghana—nations undergoing debt restructuring—as a major risk to Afreximbank’s asset quality.
- Weakening risk controls: Like Fitch, Moody’s pointed to limited transparency in reporting non-performing loans (NPLs) and inconsistencies compared to International Financial Reporting Standards (IFRS) practices for similar institutions.
- Structural vulnerability: The classification reflects Moody’s concern that sovereign debt restructurings may eventually include African multilateral lenders such as Afreximbank.
Broader Implications:
- Rising borrowing costs: Lower credit ratings could translate to higher funding costs for Afreximbank, potentially impacting its lending capacity and pricing for African borrowers.
- Fragile recovery efforts: As member nations navigate financial strain, Afreximbank’s role in supporting trade and development—especially when global capital markets are tight—faces heightened scrutiny.
- Fitch had also expressed concern over Afreximbank’s NPL ratio—7.1% according to its estimate—despite the bank reporting a 2.44% ratio as of early 2025, pointing to inconsistent credit-risk disclosures.
- Ghana and Zambia are part of debt renegotiations that include liabilities to global creditors like China and Eurobond holders.
