JPmorgan upgrades Afrexim bonds to overweight on valuations after Fitch downgrade
LONDON, June 17 (Reuters) - JPMorgan upgraded its recommendation on Afreximbank bonds to overweight from underweight on Tuesday, citing valuations following ratings agency Fitch downgrading the African trade and development lender.
Valuations had adjusted on Afreximbank's 2029 and 2031 bond, JPMorgan said in a note to clients, with both maturities now trading 75 basis points wide of the average across other BB-BBB rated bonds.
This compensates for the risk of further adverse rating actions on the bank, which are possible, JPMorgan's Konstantin Rozantsev added.
"If the bank gets involved in a restructuring (the chances of which have increased...), Fitch could downgrade the bank further from IG to HY at some point, which could lead to some forced selling of bonds."
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