AFC Receives Stable Outlook from Moody’s, Solidifying Investment-Grade Status

Moody’s A3 rating underscores AFC’s commitment to prudential guidelines that safeguard its intrinsic financial strength, supported by solid capital adequacy and high-quality liquidity buffers.

Africa Finance Corporation (AFC) (www.AfricaFC.org), the continent’s leading infrastructure solutions provider, has announced an uplift in its credit ratings outlook from Moody’s Investors Service, which has assigned a “stable” outlook to the Corporation. This marks a significant affirmation of AFC’s status as one of the highest investment-grade institutions in Africa, with Moody’s reaffirming its long-term issuer and senior unsecured ratings at A3, along with a short-term issuer rating of P-2.

In its latest report, Moody’s highlighted AFC’s resilience in asset performance despite increased country risk across several operational regions over the past year, attributing this to effective credit protections in place. The stable outlook further reflects the Corporation's governance track record and its capacity for early intervention in mitigating risks.

Moody’s A3 rating underscores AFC’s commitment to prudential guidelines that safeguard its intrinsic financial strength, supported by solid capital adequacy and high-quality liquidity buffers. In FY2023, AFC achieved notable financial results, with a Capital Adequacy Ratio rising to 34.5% from 34.3% in 2022 and a Cost-to-Income Ratio improving to 19.6%, down from 22.7% the previous year. The Corporation also reported Liquidity Coverage Ratios (LCR) of 161% under normal circumstances and 143% in a stress scenario, significantly exceeding its requirement of over 100% in both situations.

This favorable decision from Moody’s is critical for AFC as it seeks to leverage its top-tier credit ratings to secure some of the lowest borrowing costs in Africa for transformational infrastructure projects in sectors such as power, natural resources, transport, and technology. Key initiatives include Djibouti’s first wind farm, positioning the nation to rely entirely on renewable energy, and the Lobito Corridor rail project, aimed at enhancing connectivity between the Atlantic and Indian Oceans with support from the US, European Union, and governments of Angola, DRC, and Zambia.

“Amidst challenging global macroeconomic conditions, we are pleased to receive this strong endorsement from Moody’s, which is essential for our access to global capital markets,” stated Samaila Zubairu, President and CEO of AFC. He emphasized that this endorsement reinforces AFC’s role as a resilient partner in driving a prosperous future for Africa by mobilizing the capital needed to build essential infrastructure.

Moody’s analysts noted that the shift in outlook to stable from negative was influenced by expectations that AFC would maintain a stable or improving leverage ratio while preserving its asset performance record. The Corporation's ongoing equity-raising strategy, which exceeded its $1 billion target between 2019-2023, is expected to continue with similar ambitions set for 2024-2028. Additionally, starting in 2023, AFC reduced its dividend payout ratio to retain a higher share of earnings, fostering organic growth in its capital base.

In the face of uncertainties in the global financial landscape, AFC’s consistent access to global capital markets reflects the strong confidence investors have in its robust credit risk profile and growing international appeal. Notably, this year AFC secured several pivotal funding transactions, including its largest-ever debt facility, a US$1.16 billion syndicated loan, attracting new lenders from the Middle East, Europe, and Asia.