Another downgrade to Afreximbank's credit rating could lead it to turn to "friendly" countries such as China for funding, its chief economist said on Wednesday.
Ratings agency Fitch downgraded the bank to BBB- earlier this month — one notch above "junk" — citing high credit risks and weak risk-management policies.
Fitch later warned investors that another downgrade could come if Afreximbank, which is battling to avoid taking losses on lending to countries including Ghana and Zambia, has to restructure loans to member countries.
"We can get financing from more friendly countries and those that understand our market better, and they won't come up with all these long hoops we have to jump (through) to get financing," Afreximbank's chief economist, Yemi Kale, said at the bank's annual meeting in Abuja, Nigeria.
He added: "For example we don't have to go to the euro market, we have a good relationship with China."
Kale also said the bank could turn to African countries for more cash if needed, and that, while a downgrade could boost its borrowing costs, the impact would not be significant due to other available funding sources.
The bank's annual meeting, where it will choose a new president, comes in the midst of a dispute with Zambia and Ghana over whether its loans to those nations are in scope for restructuring.
Afreximbank maintains that it is a multilateral lender with "preferred creditor status" that shields it from taking losses on its loans, but both countries have said they want to restructure the loans.
Reuters
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