FINANCIAL RATING : S&P global ratings rates Afdb at “High Quality”
The Standard and Poor’s (S&P) credit rating agency in the united states has classified the African Development Bank (Afdb) in the “high quality” category. This attribution is the outcome of the financial institution’s realization of its issue called “hybrid capital”.
The bank’s classification will provide it with a positive impact on its financing and allow the issuance of green, social and sustainable bonds, among others.
On July 28th, the African Development Bank Group (Afdb) announced that it had obtained the best ‘AA’ rating in the ‘high quality’ category. The Afdb thus becomes the pioneer of innovative sustainable financing and the first multilateral bank in the world to use this instrument widely used by companies, financial institutions, insurance companies and other agencies.
As at now, no details are given on the net of the issue, but it should be noted that hybrid capital is a form of financing combining elements of equity and debt capital (debt), which complements the two aforementioned sources of financing.
According to the president of the Afdb, Akinwumi Adesina, the decision to issue hybrid capital will allow the institution to mobilize more financing on the capital markets in order to strengthen the acceleration of growth and development in Africa. The hybrid capital will in fact have a positive impact on the Bank’s financing and will pave the way for possible additional green, social and sustainable bond issues to finance high-impact projects on the continent. In particular, food security, access to water and health services, as well as climate change.
The hybrid capital Issue carried out by the Afdb is also a response to the financing needs of its member countries which, since the outbreak of the Covid-19 pandemic and the war in Ukraine, are increasingly facing the harshness of monetary policies.
Approved in October 2019 by 81 countries for an envelope of 115 billion dollars (62 330 billion FCFA), the increase in the capital of the pan-African bank was unfortunately desisted by 65 countries that did not honour the payment of 7 % of the quota, with only 16 countries that have released their assets. 10 in Africa : Nigeria, Senegal, Morocco, Benin, Eritrea, Burkina Faso, Kenya, Lesotho, Rwanda and Libya. 6 outside Africa : Germany, India, Italy, Norway, Saudi Arabia and Spain.
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