The African Development Bank (AfDB) retains its triple AAA with Moody’s, the agency informed in a report from November 2, 2021. Reelected last year for a second term, the Nigerian Akinwumi Adesina, president of the AfDB, also sees through this note renewed confidence in its management following a long so-called whistleblower crisis now forgotten.
The outlook remains stable reflects the rating agency’s optimism that the capital and liquidity ratios will be average for AAA rated institutions. Moody’s also expects prudent risk management to keep bad debts (the notorious Non-Performing Loans) low despite a difficult operating environment for the company. The perspective is also based on the continued support of shareholders through regular capital increases and, if necessary, other support mechanisms.
After several years of rising, the AfDB’s debt ratio improved slightly to 295% in 2020, from 298% in 2019. This reflects the combination of a slower rate of loan growth and the effect of first contributions made as part of the latest general capital increase, GCI VII, approved by the AfDB Board of Directors in 2019. Moody’s expects further contributions in paid-in capital from shareholders to prevent a deterioration of indebtedness over the next few years.
The bank’s liquidity cushion is among the strongest within the Aaa-rated peer group, with liquid assets covering 101% of net cash outflows over an 18-month horizon.
Non-regional member countries represent 40% of the Bank’s capital subscription, including a number of highly rated sovereigns such as the United States (Aaa, stable), Japan (A1, stable), Germany (Aaa , stable), Canada (Aaa, stable) and France (Aa2, stable), highlighting the capacity and willingness of shareholders to support the development objectives of the African Development Bank.