The African Export-Import Bank on Friday terminated its relationship with Fitch Ratings, citing concerns that the agency no longer reflected an understanding of the bank’s mission and mandate.
The decision comes after Fitch lowered Afreximbank’s credit rating last year to just above “junk” status, citing high credit risks and weak risk-management policies, and placed it on a negative outlook.
At the heart of the dispute is Afreximbank’s so-called “preferred creditor status,” which protects loans from losses during debt restructurings and is crucial for its operations.
Fitch has warned that weakening preferred creditor status at institutions like Afreximbank could trigger further negative rating actions, intensifying concerns among investors.
The Cairo-based lender faces potential losses on loans to Ghana and Zambia, which could clarify whether it maintains preferred creditor privileges enjoyed by the IMF and World Bank.
Preferred creditor status is not formally codified but generally applies to lenders offering concessional loans with government-backed shareholder structures, giving them protection in restructurings.
Afreximbank argues its founding charter, signed by 53 African states, secures its preferred creditor status, a key distinction as international capital becomes less accessible to African nations.
However, the Paris Club of official creditors has previously classified Ghana and Zambia’s loans as commercial, leaving them subject to potential restructuring and challenging the bank’s claim.
Zambia announced in October that a third party might assume its Afreximbank debt, potentially allowing restructuring without directly confronting the lender’s preferred creditor claim.
Despite the rating dispute, Afreximbank said it resolved a $750 million loan issue to Ghana last December, underscoring its legal protections and strong shareholder relationships.
Afreximbank bonds showed little movement following the Fitch split, even as JPMorgan revised its outlook on the bank’s bonds due to concerns over potential rating downgrades.
The bank is also rated by Moody’s, GCR, China Chengxin, and Japan Credit Rating Agency, with Moody’s having downgraded it to Baa2 in July without acknowledging preferred creditor status.
Daniel Cash, law professor at Aston University, described the conflict as “less a dispute with Fitch and more a reflection of deeper ambiguity about hybrid multilateral lenders’ preferred creditor status.”
Fitch declined to comment on Afreximbank’s announcement, leaving the broader debate over African multilateral lending and rating frameworks unresolved.