• Investors seem to keep focusing on yields, which are high for the moment
• New Leadership might seek to address rating concerns
• April 2026 allows testing investors’ sentiment with a call option on a bond maturing in May

The value of international bonds issued by Afreximbank remains strong on European secondary markets, even after Moody’s downgraded its rating on the institution on July 1, 2025. "The bank’s recent move into unsecured sovereign lending has introduced significant risks, diverging from its traditional trade finance focus and exposing it more acutely to challenging operational conditions," Moody’s wrote. The U.S. rating agency echoed concerns previously raised by Fitch Ratings in June.

Credit Concerns vs. Market Performance

Moody’s flagged loans to Ghana and Zambia as potential threats to the bank’s equity base, as both countries are undergoing debt restructuring under the G20 Common Framework, which requires losses comparable to those borne by private creditors. The agency also cited a decline in the quality of the bank’s funding due to reduced diversification in funding sources.

The immediate concern for investors centers around a Eurobond maturing on May 17, 2026. As of July 4, the bond was trading at 95.39% of its face value, below the peak of 102.8% reached in September 2021, but still 14.4% above its low of 81.6% in October 2022. Analysts at JPMorgan recently told CNBC Africa that this resilience reflects investor appetite for higher yields rather than deep concern over sovereign exposure.

Dr. Georges Elombi, formerly Executive Vice President and appointed President of Afreximbank on June 30, 2025, expressed disagreement with Fitch’s assessment, questioning assumptions that African sovereigns would default: "Why wouldn’t they honor their commitments as stakeholders in the bank?"

Leadership Continuity and Strategic Outlook

The methodology behind credit assessments remains a point of contention. Both Fitch and Moody’s apply conservative frameworks that, in their view, elevate the probability of default. Ghana and Zambia represent 3.02% of Afreximbank’s outstanding loans and 8.04% of its equity. While restructuring is ongoing, neither country has defaulted. This view contrasts with international accounting standards, which classify a loan as non-performing only after 90 days of missed payments.

Despite the ratings pressure, Moody’s acknowledged the bank’s liquidity buffer is sufficient to meet obligations for 18 months. Fitch also suggested this window could cover any temporary suspensions in sovereign repayments.

Afreximbank has bolstered its position by recovering repayments and raising $823 million through Panda and Samurai bonds between late 2024 and early 2025. The bank’s liquidity reserve now stands at $9.5 billion—an important confidence signal for investors.

Dr. Elombi’s appointment seen as a sign of policy continuity following the tenure of Dr. Benedict Oramah, will have to face these challenges, but also rising opportunities. Calls to establish an African credit rating agency are gaining traction. A recent Africa Finance Corporation report estimates the continent holds $4 trillion in untapped liquidity.

Experts continue to advocate for greater reliance on Asian and Middle Eastern capital markets to bypass the structural hurdles of Western financing channels. Afreximbank has an opportunity to test investor sentiment directly if it decides on April 17, 2026, to refinance its $600 million Eurobond, which is due in May 2026. Such an operation would help determine potential refinancing terms.

The original bond carried a 2.63% coupon—issued at a time when global yields were near zero. Today, 10-year Eurozone government bonds yield an average of 3.17%, while U.S. Treasuries hover around 4%. Afreximbank’s bonds continue to offer an attractive yield of 6.04%, with semiannual interest payments.

By Idriss Linge