The Arab Bank for Economic Development in Africa (BADEA) has been upgraded by Moody’s Ratings to Aa1 / Stable outlook (from Aa2/Positive Outlook).
The rating upgrade reflects BADEA’s robust capital buffers and very low leverage as well as continuously strengthening asset quality with only 0.51% NPLs. The very low NPLs ratio has been achieved and maintained despite a very challenging environment in Sub Saharan Africa (SSA) where the bank provides all its policy lending. The shareholder countries of BADEA (Arab countries) do not benefit from the lending operations of the bank due to its institutional governance structure.
The upgrade also reflects BADEA ’s improving liquidity profile and funding franchise. The ratio of highly rated liquid assets relative to net cash out flows over the coming 18 months improved from 126% in 2022 to 190% in 2023 and peaked to 250% in Q1 2024 following additional liquidity from bonds issuance.
The bank’s funding franchise has benefitted from successful establishment of a Euro Medium Term Note Programme, and a Sustainable Financing Framework followed by the inaugural issuance in Q1 2024 of a Eur 500 Mn Social Bond under the program. The bank plans to be a regular benchmark issuer in the debt markets.
BADEA also recently amended its Articles of Establishment which was unanimously adopted by all shareholders with several updates – particularly the contractual formalization of USD 5Bn callable capital into the capital structure of the bank. This, in addition to prompt operational support during the bank’s recent relocation demonstrates strong shareholder support.
“This upgrade to Aa1 puts us in an even stronger position to raise funds at highly competitive rates and will significantly expand our capacity to continue channelling resources towards priority sectors in Sub Saharan Africa. However, as the bank marks 50yearsofimpactfuloperationsin Africa,our workisnotcomplete, and thisonly marks a new beginning. As shareholders – we remain committed to further strengthening BADEA’s credit and business profile into the top-tier of benchmark development institutions globally” said H.E. Dr. Fahad Aldossari, BADEA’s Board Chairman.
H.E. Dr. Sidi Ould Tah, BADEA’s President said “The Aa1 rating recognises BADEA’s extraordinary capital and liquidity position, as well as asset performance in the most challenging of credit conditions. The stable outlook reflects the sustained strengthening of our institutional capabilities. The team are justly proud of this exceptional achievement, which would not have been possible without the trust and extraordinary support that we have consistently received from our shareholders over the last five decades that BADEA has been operating in Africa”.
