Moody’s Investors Service has downgraded the long-term credit rating of the African Export-Import Bank (Afreximbank) from Baa1 to Baa2, with a revised outlook from negative to stable. Moody’s justifies this decision by “weaker-than-expected asset performance, increasing exposure to distressed states, and a significant reduction in its sources of funding.”
The agency specifically points to Afreximbank’s strategic shift away from its traditional trade financing mission to providing unsecured sovereign loans to countries like Ghana, Zambia, and Malawi, all facing debt distress or restructuring situations.
“The recent shift by the bank towards unsecured loans to distressed states has introduced significant risks,” notes Moody’s, adding that this approach makes Afreximbank more vulnerable in an already complex operating environment.
In its report published on July 1st, Moody’s highlights that the G20 Common Framework, which governs sovereign debt restructuring, requires fair treatment for all creditors. This means that loans provided by Afreximbank could be subject to restructuring conditions similar to those imposed on commercial creditors, questioning the bank’s status as a preferred creditor.
The agency also questions Afreximbank’s ability to raise funds at low cost through bilateral and syndicated loans. Afreximbank now seems to rely on smaller and less diversified sources of funding, it notes. Among recent transactions, Moody’s mentions a $520 million Samurai bond issued in late 2024 and a $303 million Panda bond in early 2025. These amounts are considered “modest” compared to the bank’s total financing needs.
