The African Export-Import Bank (Afreximbank) has ended its relationship with credit rating agency Fitch, saying the agency’s approach no longer reflects an understanding of the bank’s mandate and role in Africa’s development.
The decision comes amid a long-running dispute over whether Afreximbank should take losses on loans issued to countries that have defaulted on their debts, including Ghana and Zambia.
At the centre of the debate is whether the Cairo-based lender enjoys “preferred creditor status” a position held by institutions such as the IMF and World Bank, which protects their loans from losses during debt restructurings.
Last year, Fitch downgraded Afreximbank’s credit rating to just one level above junk status, citing high credit risks and concerns about risk management. It also placed the bank on a negative outlook, warning of a possible further downgrade.
Previously, Fitch said any weakening of preferred creditor status for institutions like Afreximbank could trigger additional negative rating action.
According to Reuters, the New York-based rating agency declined to comment on Afreximbank’s decision to end the relationship.
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Preferred creditor status is not formally defined in law but is based on long-standing market practice. It is generally linked to whether an institution’s lending is concessional and whether its shareholders are sovereign governments rather than private investors.
Afreximbank, whose shareholders include African states as well as private investors, argues that its founding charter, signed by 53 African countries, grants it this status.
However, some creditors, including members of the Paris Club, have reportedly viewed Afreximbank’s loans to Ghana and Zambia as commercial in nature and therefore eligible for restructuring.
Both countries have since indicated plans to restructure these loans. Zambia has even suggested that a third party could take over its Afreximbank debt, allowing the restructuring to proceed without directly addressing the preferred creditor question.
In December, Afreximbank said it had resolved issues related to a $750 million loan to Ghana, although it did not provide details. The bank maintains that it remains financially strong, supported by solid shareholder backing and legal protections.
Concerns over the situation have also affected market sentiment. U.S. investment bank JPMorgan recently downgraded its view on Afreximbank bonds, citing fears that Fitch could push the rating into junk territory if losses on Ghanaian loans were confirmed.
Despite the split with Fitch, Afreximbank continues to be rated by other agencies, including Moody’s, which downgraded the bank to Baa2 in July but did not factor preferred creditor status into its assessment.
The bank is also rated by GCR, China Chengxin International Credit Rating, and the Japan Credit Rating Agency.
