Reaffirmation of Standard & Poor’s AAA Rating of African Development Bank Good for Africa
The role being played by the African Development Bank in mitigating the overall impact of the Covid-19 continent wide seem to have done the magic as rating agency’s pointed to the Bank’s healthy interventions as encouraging. With the reaffirmation of its ‘AAA/A-1+’ long- and short-term issuer credit assessment of the African Development Bank (AfDB) (www.AfDB.org) with a stable outlook. According to experts, the rating agency’s positive assessment of the Bank’s very strong financial risk profile, very strong capital adequacy, strong funding and liquidity, extraordinary shareholder support and adequacy of its governance and management goes a long way to show the potential within the continent.
In arriving at the decision to reaffirm its triple A rating, S&P noted the Bank’s $115 billion capital increase, approved by shareholders in October 2019, and the replenishment to the African Development Fund, the Bank’s concessional window, in December 2019. “The stable outlook reflects our expectation that, over the next two years, AfDB will prudently manage its capital while maintaining solid levels of high-quality liquidity assets and robust funding,” S&P Global said in a statement.
S&P expects that “shareholders will remain supportive by providing timely capital payments”; the Bank “will continue benefiting from preferred creditor treatment (PCT); and “prudently manage growth in private-sector lending in a way that’s aligned with its mandate.”
The rating agency’s report further noted that the “AfDB will play a key role supporting the region, particularly in the context of COVID-19. The institution approved an up to $10 billion relief package for 2020, of which $6.9 billion will be financed by AfDB and the remainder through its concessional lending window.”
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Responding to the development, the President of the Bank, Akinwumi A. Adesina, said that “we are delighted with and welcome S&P Global’s decision to affirm the Bank’s AAA/A-1+ rating. It reflects the Bank’s very strong financial position and risk management, as well as our sound governance. We will continue to maintain these standards, with the strong support of all our shareholders, as we deliver much needed financial, knowledge and policy support to our regional member countries during and after this period of the COVID-19 pandemic.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry