Moody’s affirms ECOWAS bank’s credit rating

Moody’s Investors Service has affirmed the ECOWAS Bank for Investment and Development’s B2 long-term issuer rating and maintained the stable outlook.

The global rating agency said on Friday that the rating affirmation was driven by several credit constraints and mitigants, including the bank’s narrower sources of borrowing than other supranational financial institutions, but improved liquidity buffer.

Other constraints are a challenging region of operations, which constrains asset quality notwithstanding the bank’s diversified loan portfolio, as well as limited capacity to rely on its shareholders’ extraordinary support through callable capital, it said. 

Moody’s said while the bank has upgraded its risk management framework over the last three years, with significant improvements to the liquidity and lending policies, it has not yet entirely caught up with that of the sector as a whole.

It said, “The stable outlook balances the prospect for further improvements in the bank’s liquidity profile and the management of asset performance, as well as the potential for additional capital injections by shareholders, against downside risks from the deteriorating operating environment in its countries of operations, especially in the West African Economic and Monetary Union. 

“The provision of further paid-in capital could in particular provide additional buffers in case asset performance were to deteriorate and could enable the bank to continue expanding its loan portfolio while containing the planned rise in leverage.”