Africa Finance Corporation (AFC) has received an uplift to its credit ratings outlook from Moody’s Ratings, with the assignment of a stable outlook.

This decision further solidifies AFC’s position as one of the highest investment-grade African institutions, with Moody’s affirming the Corporation’s long-term issuer and senior unsecured ratings at A3, as well as AFC’s short-term issuer rating at P-2.

“Notwithstanding increased country risk in several of AFC’s countries of operation over the past year, asset performance has proven resilient amid effective credit protections,” Moody’s analysts stated in its latest report. “The stable outlook also reflects management’s governance track record and early intervention capacity to mitigate materialising risks at an early stage.”

Moody’s A3 rating affirmation reflects AFC’s adherence to its prudential guidelines to safeguard the Corporation’s intrinsic financial strength based on solid capital adequacy and high-quality liquidity buffers.

In FY2023, the Corporation recorded an outstanding financial performance, with its capital adequacy ratio increased to 34.5% from 34.3% in 2022 and its cost_to-income ratio improved to 19.6%, from 22.7% in 2022.

Additionally, the Corporation recorded Liquidity Coverage Ratios (LCR) of 161% and 143% under normal circumstances and a stress scenario respectively, significantly higher than the Corporation’s LCR requirement of greater than 100% in both scenarios. AFC’s landmark initiatives include Djibouti’s first wind farm – with AFC as lead developer advancing plans for Djibouti to become the first African country wholly reliant on renewable sources for energy, and the Lobito Corridor rail project, with AFC again the lead developer, working alongside the US, EU and the governments of Angola, DRC and Zambia to mobilise industry and connect the Atlantic and President and CEO of AFC, said the rating “reinforces our position as the resilient and reliable partner for a more prosperous African future and an indispensable ally in mobilising urgently needed capital to build the infrastructure that integrates Africa and enables its industrialisation.”

Moody’s analysts commented: “The improved leverage outlook reflects the Corporation’s continued equity raising strategy. The Corporation exceeded its $1 billion target in 2019-23 and aims to raise a similar amount during 2024-28. Moreover, the Corporation lowered its dividend payout ratio starting 2023, which will help retain a higher share of earnings and grow the capital base organically in the future.”

This year, AFC has completed several pivotal funding transactions including its largest-ever debt facility, a $1.16bn syndicated loan, attracting new lenders from the Middle East, Europe, and Asia.

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