Moody’s Affirms AFC Rating With Outlook Stable

Africa Finance Corporation (AFC), has had its long-term issuer credit rating of A3 affirmed by Moody’s Ratings, a rating first assigned in 2014 and consistently maintained for over a decade.

Moody’s affirmed this rating with a stable outlook and affirmed AFC’s short-term issuer rating at P-2, underscoring the Corporation’s status as one of the highest-rated investment-grade institutions in Africa.

“Despite elevated country risk in several of AFC’s countries of operation and the low average rating of its shareholder base, the credit profile is supported by a sound liquidity buffer backed by high-quality treasury assets and resilient asset performance, underpinned by effective credit protections that mitigate potential credit risks.,” Moody’s stated in its latest report.

Moody’s A3 rating affirmation reflects AFC’s strict adherence to its prudential guidelines and its robust financial performance. In FY2024, the Corporation delivered its strongest financial results to date, surpassing $1bn in total revenue and growing total assets by 16.7 per cent to $14.41bn.

AFC also maintained a Capital Adequacy Ratio of 33.6 per cent, improved its Cost-to-Income Ratio to 17.3 per cent and recorded Liquidity Coverage Ratios (LCR) of 194 per cent and 191 per cent under normal circumstances and a stress scenario, respectively, significantly higher than its 100 per cent threshold.

According to the report, the decision by Moody’s is pivotal in enabling AFC to sustain one of the lowest borrowing costs among institutions in Africa.

This financial strength has, over the past year, allowed the Corporation to mobilise capital for transformational projects across the continent, including the Lobito Corridor railway linking Angola, the Democratic Republic of Congo, and Zambia, where AFC secured a concession agreement in record time, and a $150m investment in the Kamoa-Kakula Copper Complex, Africa’s largest and one of the world’s most sustainable copper producers.

“Moody’s reaffirmation of our A3/P-2 ratings for the eleventh consecutive year is a strong testament to AFC’s robust financial strength and resilience, even amidst global headwinds,” commented, President & CEO of Africa Finance Corporation, Samaila Zubairu. “It reinforces our ability to consistently access long-term capital at competitive rates to deliver on our mandate to finance transformational infrastructure projects that integrate Africa and enables its industrialisation,” he added.

“Overall, the corporation’s funding plan aims to diversify funding sources geographically and by instrument (e.g., green bonds, private placements, sukuk) and pursue innovative funding structures to access niche markets at favourable terms, including ESG-linked instruments and hybrid formats,” Moody’s analysts said, commending AFC.

“We assess AFC’s quality of funding structure at “a”, indicating the corporation’s demonstrated capacity to borrow at varying maturities and from different sources to help smooth its redemption profile,” they reported.

The agency also assessed AFC’s liquid resources buffer at “aaa”, reflecting its conservative liquidity policy and strong high-quality liquidity position relative to peers.

The report noted that against a backdrop of global financial uncertainty, AFC continues to demonstrate strong and diversified market access.

Recent milestones according to the company include the issuance of a $500m perpetual hybrid bond, a $400m Shariah-compliant Commodity Murabaha, and a landmark $1.5bn three-year syndicated loan that was originally launched at $1.3bn.