AFC wins S&P ‘A’ score, eyes cheaper funding throughout Africa 

Africa Finance Company (AFC) says its newly secured ‘A’ long-term credit standing from S&P World will decrease its borrowing prices and strengthen its means to develop infrastructure financing throughout Africa.

The evaluation was disclosed by AFC’s President and Chief Government Officer, Samaila Zubairu, in feedback to Reuters, following S&P’s first-ever score of the multilateral improvement finance establishment.

The event comes as African lenders more and more search market-based funding to offset declining concessional financing and decreased Western assist flows.

The S&P score locations the Nigeria-backed lender firmly throughout the world investment-grade class, reinforcing its credibility with worldwide buyers and probably bettering entry to cheaper capital.

What they’re saying 

Zubairu mentioned the S&P score represents an vital validation of AFC’s monetary power and working mannequin, with implications for each the establishment and its shoppers throughout the continent.

“This for us is validation of who we’re that ought to translate into higher market entry,” Zubairu mentioned, including that the score places the lender “firmly within the investment-grade pocket” for many buyers.

“That ought to, over time scale back value of funding for us and for our shoppers on the continent,” he added.

Based on the AFC CEO, decrease borrowing prices will permit the establishment to scale financing for precedence sectors at a time when African economies face tightening world monetary situations.

Extra Insights 

S&P World cited AFC’s sturdy asset high quality and really sturdy liquidity protection as key components behind the score. Along with the long-term ‘A’ score, the company additionally assigned the lender an A-1 short-term credit standing and a constructive outlook, indicating the potential for future upgrades.

• AFC already holds an A3 score from Moody’s, an AAAspc score from S&P Rankings (China), and an A+ score from the Japan Credit score Score Company.
• S&P famous that its constructive outlook displays expectations that AFC will develop its sovereign shareholder base over time.
• The Central Bank of Nigeria (CBN) and Nigerian monetary establishments at present account for about 75 per cent of AFC’s whole shareholding, demonstrating Nigeria’s dominant position within the lender.

The S&P improve contrasts sharply with developments elsewhere on the continent, as Afreximbank was downgraded to junk standing by Fitch, shortly after severing ties with the score company.

Why this issues 

The score improve comes at a vital second for African improvement finance, as lenders face greater world rates of interest, rising credit score dangers, and decreased entry to concessional funding.

• An investment-grade score improves AFC’s means to elevate capital at decrease yields in worldwide markets.
• Decrease funding prices can translate into cheaper long-term financing for infrastructure, power, and industrial initiatives throughout Africa.
• The score strengthens confidence in African-led monetary establishments at a time when exterior improvement finance is turning into extra constrained.

For Nigeria, which stays AFC’s largest shareholder, the improved score additionally reinforces the nation’s oblique publicity to a stronger and extra aggressive continental lender.

What you need to know 

AFC is an infrastructure-focused multilateral improvement finance establishment that performs a central position in funding large-scale initiatives throughout Africa.

• The bank invested about $4 billion in initiatives final 12 months, and Zubairu mentioned a stronger pipeline this 12 months would see investments at or above 2025 ranges.
• Precedence sectors embody gold mining, vital minerals, renewable power, and fertiliser, reflecting Africa’s useful resource base and industrial wants.
• AFC is a key financier of the Lobito Hall, a U.S.-backed railway mission linking copper fields in Zambia and cobalt mines within the Democratic Republic of the Congo to Angola’s Lobito port, which is driving elevated curiosity in mining and agriculture within the area.

When it comes to funding, the lender plans to proceed elevating capital by means of worldwide bond issuances, together with sukuk, panda, and samurai bonds, whereas additionally exploring its first non-public credit score funding offers as world buyers seek for greater yields in growing markets.