Japan Credit Rating Agency (JCR) has affirmed the African Development Bank’s long-term rating at AAA with a stable outlook.
The agency commended the African Development Bank for its strong member-country support, as evidenced by the seven general capital increases it has carried out to date. The report reflected on the institution’s financial structure, risk management and funding, noting that JCR monitors whether multilateral development banks are financially viable enough to sustain their business in terms of financial structure, profitability and risk management.
Although the Bank’s equity investment remained limited in volume, its risks have been growing due to the impact of the Covid-19 pandemic. The Bank responded rapidly to cushion the impact of the pandemic on its member countries by establishing a Covid-19 Response Facility.
The report notes that the Bank’s “treasury investment is aimed to ensure ample liquidity and efficient management of assets, the Bank manages it in a conservative manner, limiting its investment to counterparties that have high credit standings.”
Benefiting from its high credit standing, JCR said the Bank has been raising funds from international capital markets on favorable terms.
“The Bank met almost all of its conservative internal regulations with respect to lending, equity participation, risk capital utilization, borrowing and liquidity at the end of 2020. The Bank’s risk capital utilization ratio has been close to the upper limit defined by its internal regulations due mainly to the increased risks related to its loan and investment exposures.”
However, JCR holds that the Bank will continue to comply with the regulations “as it has taken remedy measures including the special temporary callable capital increase in March 2021, the optimization of its asset portfolio, and as progress is being made in the payment of the capital increase.”
While noting that the continued impact of the Covid-19 pandemic could weaken the quality of the Bank’s assets mainly with its non-sovereign loans, JCR said that “any increased credit cost can be mostly absorbed by earnings and that its impact on the Bank’s financial base will be limited.”
The agency also discounted the possibility of the current ratings coming under downward pressure if the majority of the member countries fail to pay for the latest capital increase, or when the Bank’s non-sovereign loans expand in volume and their asset quality deteriorates significantly in the long term.
“JCR holds that such possibility is slim,” the report noted.
Bajabulile “Swazi” Tshabalala, Vice President for Finance and Chief Finance Officer of the African Development Bank, said: “Japan Credit Rating Agency’s ratings is proof of our prudent risk management policies, our solid financial performance and the robust support we enjoy from our members.”
The African Development Bank currently holds triple A ratings from Fitch, Moody’s and Standard and Poor’s.
Lebara Group is now bringing its affordable and reliable mobile services to Africa, starting with Ni...
Transport and food prices have been climbing steadily across Africa in recent years. In Côte d’Ivoir...
• BOAD releases CFA10 billion ($17.8 million) to support Boungou and Wahgnion gold mines.• Burkina F...
In a West African financial landscape marked by tighter regulation of the fintech sector, digital fi...
• Maritime sector faces renewed risks amid military tensions in the Middle East• Blockade fears at S...
The MTN Nigeria Dabengwa Tier 3 Data Centre is more than just a physical infrastructure project — it’s a foundational investment in Nigeria’s digital...
• South Sudan initiates a $58 million, four-year project to transform basic education nationwide.• The program aims to directly benefit over 300,000...
• Cape Verde reclassified as an upper-middle-income country due to a 16.8% rise in GNI per capita.• Namibia downgraded to lower-middle-income after a...
• Ivory Coast grants two new four-year gold exploration permits to Global Industries Sarl and Rampage Exploration Sarl.• National gold production reached...
The Gerewol tradition is a fascinating ritual celebrated by the Bororo Fulani, a nomadic community primarily located in Chad and Niger. This annual...
In northern Ethiopia, in the Tigray region, lies Axum (also spelled Aksum), an ancient city that once stood at the heart of one of Africa’s most powerful...