Fitch downgrades Afreximbank to one notch above ‘junk'
The one-notch downgrade to BBB- comes as the African lender battles to protect its loans from restructuring in Ghana, Zambia and Malawi, claiming that as a multilateral lender it has preferred creditor status.
Fitch pegged Afreximbank's non-performing loans at above 6%, while the bank itself reported an NPL ratio of 2.44% in the first half.
'The revision of risk management to 'weak' reflects low transparency in the recent reporting of loan performance relative to multilateral development bank peers and that Fitch's definition of NPLs differs from the bank's approach, which makes use of flexibilities offered by IFRS 9,' Fitch said.
A lower credit rating can increase the borrowing cost for an issuer, which can in turn impact how much they can lend and at what rates.
Fitch upgrades Pakistan's rating: macroeconomic stabilisation acknowledged
Fitch attributed the negative outlook, which effectively puts the bank on downgrade watch, to the risk that some of its debt to sovereign borrowers might be included in restructuring.
'This would put pressure on our assessment of the bank's policy importance and heighten the risk associated with its strategy,' Fitch said.
Afreximbank did not immediately comment on the downgrade.
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Pharmaceutical exports: some prescriptions
'The global pharmaceutical market is in a state of flux due to major restructuring, both in terms of the demand and supply. This presents a unique opportunity for the sector in Pakistan to take timely action by positioning itself strategically to enter the global drugs market. Pakistan is well poised to gain from opportunities provided under these shuffling global patterns of demand and supply'. International Trade Centre study titled Pakistan Export Strategy – Pharmaceuticals 2023-2027. The Pharmaceutical market in Pakistan is estimated at over PKR 1.10 trillion, growing at a rate of over 15 percent according to analysts. There are over 700 pharmaceutical companies from Karachi to Khyber. In Pakistan, 80 percent of the domestic need for medicine is fulfilled by local manufacturing, whereas the other 20 percent is through imports. 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In the same manner as other Pakistani products, the menace of illicit exports of pharma products which in many cases lack quality assurance, use substandard raw material, and are unethically counterfeit, while bringing in undocumented foreign proceeds, result in creating a negative image of the pharma sector. It is recommended that a pharma oversight Council be formed consisting of representatives from SIFC, Anti-Narcotics Force, Army Corps X1 and Corps X11 based in KPK and Balochistan, as well as from the Pakistan Pharmaceuticals Manufacturers Association that would identify those in this illicit trade, seal their premises, and prosecute the owners or perpetrators. This illicit trade is estimated to be around USD 90-100 million annually and is growing every year. It is an accepted fact that exports of pharmaceutical products require compliance with world-class quality assurance standards, maximum focus on health safety standards, and investment in modern technologies, including use of Artificial Intelligence. A solid foundation is imperative in order to claim a stake in the export regime, as this would enable the companies to enhance their competitiveness in the global market. According to Arshad Rahim Khan, an old pro in the pharma industry who has been appointed as TDAP Consultant on pharmaceuticals, 'currently, the sector is underdeveloped, non-compliant with international regulations (cGMP, PICs, ISO, WHO, EU, UK, US), low performing, and hence at a low entry valuation'. Haroon Qasim, a leading pharmaceutical company owner and advocate of instilling the concept of new technology in manufacturing, highlighted the role of digital technologies in revolutionising drug development, patient engagement, and pharmacovigilance. 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