Africa-Press – Kenya. Afreximbank’s chief economist, Yemi Kale, stated on Wednesday that another downgrade to the bank’s credit rating might lead it to seek funding from “friendly” countries like China.
This follows Fitch’s recent downgrade of Afreximbank to BBB-, one notch above “junk,” citing high credit risks and weak risk-management policies.
Fitch has also warned of a further downgrade if the bank, which is trying to avoid losses on loans to countries such as Ghana and Zambia, has to restructure loans to its member countries.
Kale explained that the bank could secure financing from countries that better understand their market, avoiding the complex requirements of traditional markets.
He specifically mentioned China as an alternative to the euro market, citing a good relationship.
He also noted that African countries could be a source of additional funds if needed.
While a downgrade could increase borrowing costs, Kale believes the impact would be minimal due to other available funding sources.
The bank’s annual meeting, where a new president will be chosen, is taking place amidst a disagreement with Zambia and Ghana regarding the restructuring of Afreximbank’s loans.
Afreximbank asserts its status as a multilateral lender with “preferred creditor status,” which it believes should protect it from loan losses, but both countries are seeking to restructure their loans.
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