Afreximbank, Fitch cuts the rating again and closes reports

First the downgrade below 'junk' level, then the withdrawal of the ratings on the bank. The rating company Fitch yesterday issued a final downgrade of Afreximbank, the Cairo-based multilateral institution, inflicting a cut from BBB- to BB+ that slips the institution below the threshold of so-called non-investment grade.

The US group then announced that it 'will no longer provide ratings or analytical coverage for the bank', ending a dispute that arose from a disagreement over the bank's supranational role and resulted in a new chapter in the clash between African institutions and the so-called Big Three: the trio of rating giants formed by Fitch itself along with Moody's and Standard & Poor's Global Ratings.

Afreximbank had announced a few days ago that it was breaking with Fitch, questioning its failure to understand its 'mandate' as a multilateral institution and its claims to privileged creditor status over the risks of losses from defaulting sovereign debts such as those of Ghana and Zambia.

The African Peer Review Mechanism, a rating watchdog of the African Union, supported the bank's line and warned Fitch against publishing 'uninformative' ratings on Afreximbank, echoing the dissatisfaction of the continental institutions with the performance of the old biggies.

The warning seems to have fallen on deaf ears, even if it coincides with Fitch's own exit from the scene and the bilateral resolution of a relationship that has become increasingly conflictual since the downgrading launched last June, the aftermath of the controversy and the latest back-and-forth between the two. Unsurprisingly, Fitch's latest act also touches on the very issue of Afreximbank's role - or not - as a preferred creditor, a de facto condition that would allow the bank to protect itself from losses in the event of debt restructuring that ended in sovereign default.