JOHANNESBURG: The African Union’s ratings watchdog has warned that any future credit assessments issued by Fitch Ratings on Afreximbank could mislead investors, after the pan-African lender cut ties with the agency.
Afreximbank, formally known as the African Export-Import Bank, said last week it had ended its relationship with Fitch, citing concerns over the quality of the agency’s analytical approach.
In a statement issued on Monday, the African Peer Review Mechanism (APRM) said it viewed the bank’s decision as justified, adding that any subsequent ratings from Fitch would be unsolicited and non-participatory.
“Any future ratings issued by Fitch in respect of the Bank would be unsolicited and non-participatory, and therefore risk misinforming investors,” the APRM said in a statement.
Fitch declined to comment on the watchdog’s remarks.
The ratings agency downgraded Afreximbank in June to one notch above junk status, citing elevated credit risks and weak risk-management policies. It also placed the lender on a negative outlook, signalling the possibility of a further downgrade.
The APRM said Afreximbank’s decision was not driven by the downgrade itself, but by what it described as fundamental disagreements over Fitch’s rationale, analytical framing and interpretation of risk.
The AU and some African nations allege that the so-called “Big Three” ratings agencies – Moody’s, Fitch and S&P Global Ratings – do not fairly assess the risk of lending in Africa, driving borrowing costs.
Afreximbank, which specialises in trade and project finance, is facing questions over whether it has “preferred creditor status”, which would shield its loans to debt-distressed countries like Ghana and Zambia from losses in debt defaults.
Fitch has warned that any erosion of that status could trigger further ratings action. Afreximbank is also rated by Moody’s, which downgraded the lender in July to two notches above junk, though it has never granted it a ratings uplift linked to preferred creditor status.
