Fitch Ratings has confirmed the African Development Bank’s (AfDB’s) Issuer Default Rating (IDR) rating, keeping it at “AAA” with a stable outlook.
AfDB enjoys strong support from its 80 member states, which include 26 non-African countries with high average ratings. Callable capital subscribed by member states rated ‘AAA’, the largest of which are the US, Germany and Canada, accounts for 21% of the total.
According to Fitch Ratings, the fast growth in lending in the last two years has translated into a rapid increase in AfDB’s indebtedness.
Coverage of net debt by callable capital from member states rated ‘AAA’ falling below 100% as a result of an increase in gross debt or a reduction in the proportion of liquid assets rated ‘AA-‘ or above.
The London-based Agency warned that if there is no clear evidence of a capital increase within the next two years, it will curb lending growth to preserve the bank’s solvency metrics.
In accordance with Fitch’s policies the issuer appealed and provided additional information to Fitch that resulted in a rating action that is different from the original rating committee outcome.