The Eastern and Southern African Trade and Development Bank (TDB) is pleased to announce that it was rated for the first time in October 2024 by the Japan Credit Rating Agency (JCR), which extended to the Bank an A- long-term issuer investment grade rating, with a stable outlook. As per JCR’s assessment, TDB’s rating reflects among others the strong support from shareholders and solid earning capacity.
Lil‹ewise, cluring the same month, GCR Ratings affirmecl TDB’s investment gracle ratings, with international scale long ancl short-term issuer BBB+/A2 ratings, with a stable outlook. These ratings are unclerpinnecl by the Banl‹’s cliversifiecl ancl expancling membership base, its solicl liquiclity ancl cliverse lunching, goocl governance structures, goocl tracl‹ recorcl of manclate execution, ancl solicl capitalisation.
At the same time, a few of TDB’s sovereign Member States having been downgraded due to debt sustainability issues has put downward pressure on the Banl‹’s Fitch and Moody’s ratings. In September 2024, Fitch affirmed TDB’s long-term issuer default BB+ rating, with a revised outlool‹ from stable to negative, and affirmed its short-term issuer default B rating and AAA (l‹en) national rating, with a stable outlook. Furthermore, in October 2024, Moody’s revised TDB’s long- term issuer credit rating to Ba 1 from Baa3, with the outlool‹ changing from negative to stable.
Financial institutions in the iurisclictionswhere clowngracles happen are typically subject to the same clowngracle pressures ancl as such, there are strong tenclencies of spillover creclit ratings effect. Despite the significant risl‹ mitigants in place, which cover significant portions of TDB’s loan portfolio, sovereigns’ callable capital, and other obligations, higher-risl‹ operating environments often result in negative adjustments on ratings.
Notwithstanding, TDB Group has had other positive rating issuances during the period under review. JCR also extended an inaugural A- investment grade rating to the ESATF trade fund, a collective investment scheme financing short to medium-term transactions managed by the ESATAL fund management company, a TDB Group subsidiary. As per its assessment, ”the rating reflects the relatively short turnover cash flow structure and stable tracl‹ record of the short-term trade finance, and the fact that the borrowing limit is set conservatively against the repayment resources.“ JCR also recognized ESATF’s diversified portfolio and robust collateral protection from risk.
Complementing JCR’s assessment of ESATF are the inaugural ratings of CARE Ratings (Africa) Private Limited (C RAF), which extended a ‘CARE MAU AAAf’ investment grade rating to the trade fund. As mentioned in the rating rationale, ESATF’s rating is
”underpinned by the portfolio’s strong investment and credit guidelines, ability of ESATAL to manage the assets, and healthy quality of the portfolio, which is secured by comfortable collateral coverage“. In its assessment, CRAF has considered ”credit enhancements like preferred creditor status, offshore operating account as collateral with bankruptcy remote structures”. According to CRAF’s rating definition, “funds with this rating are considered to have the highest degree of safety regarding timely receipt of payments from the investments that they have made“.
Admassu Tadesse, TDB Group President and Managing Director commented:
“We are very p/eased with our new invesfmenf grade ratings from the widely recognized Japanese credit rating agency JCR, as we// os from CPAF, which is domiciled in Mourifius, home to a TDB Group principo/ office, and to severo/ of ifs subsidiaries — such as he ESATAL /und management company, he ESATF trade Finance /und and the COMESA in/rosfrucfure Fund. Our resu/Is in ferms o/ ratings as exp/ained o6ove are overall positive in he context oL global stocks, economic cyc/es and sovereign debt susfoina6i/ify pressures.“
TDB Group is set-up as a sovereign-owned African multilateral lender, often acting countercyclically as lender of last resort, with the mandate to provide trade and development financing to its Member States. Much of TDB’s successful tracl‹ record and resilience can be attributed to its agility to innovate, including at an institutional level. Notably, TDB’s evolution into a Group structure, with several subsidiaries and strategic business units and a diversified geographical footprint, is enabling it to significantly expand impact, reach and sustainability. It is in this spirit that ESATAL and ESATF were set-up, alongside others like the Trade and Development Fund (TDF), the Group’s concessional and grant window, and the TDB Captive Insurance Company (TCI), which seel‹s to reenforce and streamline risl‹ management across the Group.
