AU agency says Fitch's downgrade of Afreximbank is ‘flawed'
An African Union (AU) credit review body has questioned Fitch ratings agency's downgrade of Africa Export-Import Bank (Afreximbank) last week, saying it was based on a 'flawed' categorisation of loans and calling for the decision to be reconsidered.
Last Wednesday Fitch downgraded Cairo-based Afreximbank's credit rating to BBB-, one notch above junk ratings, from BBB, citing high credit risks and weak risk management policies.
Fitch calculated the ratio of Afreximbank's non-performing loans (NPLs) exceeded the 6% "high risk" threshold outlined in the ratings agency's criteria. Afreximbank said in its first quarter operating results the NPLs ratio stood at 2.44% at the end of March.
The African Peer Review Mechanism (APRM), a body established by the AU to do the groundwork for the launch of an African credit ratings agency later this year, contested Fitch's calculations and called for talks between Fitch, Afreximbank and other African institutions.
'The APRM notes with concern Fitch Ratings' misclassification of Afreximbank's sovereign exposures to the governments of Ghana, South Sudan and Zambia as NPLs,' APRM said on Friday.
'The classification raises critical legal, institutional and analytical issues which the APRM strongly contests.'
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