JP Morgan
Investment bank JP Morgan Chase has upgraded its view on African Export-Import Bank (Afreximbank), moving its recommendation from “underweight” to “overweight” after recent market repricing made the bank’s securities more attractive relative to peers, according to a report cited by Reuters.
The shift reflects growing investor confidence in Afreximbank’s underlying financial strength, institutional structure and its ability to navigate sovereign debt restructuring environments while maintaining strong shareholder and policy support.
Market reassessment
Afreximbank bonds experienced a sell-off in January after Fitch Ratings revised its assessment of the bank’s credit profile, raising questions about how development finance institutions are treated in certain sovereign restructuring cases.
The market reaction created pricing dislocations across Afreximbank’s outstanding bonds.
JP Morgan analysts said the repricing significantly improved relative value, making the bank’s bonds more compelling when compared with similar supranational and development finance issuers.
According to Reuters, the bank noted that the sell-off “created more value in these bonds and made them attractive relative to benchmarks,” prompting the upgrade.
Ghana resolution supports sentiment
Investor sentiment has also been strengthened by clarity around Afreximbank’s engagement with Ghana, where the bank reached a mutually agreed resolution on a US$750 million facility originally signed in 2022.
Both parties confirmed the issue had been settled to their satisfaction, allowing continued cooperation in support of Ghana’s development agenda.
Market participants have drawn parallels with Zambia, where sovereign debt restructuring discussions remain ongoing.
Analysts said the Ghana outcome provides a useful reference point for how African development finance institutions may be treated in future restructuring scenarios.
JP Morgan indicated that Afreximbank has the flexibility to adjust its lending structures and risk management approaches to limit exposure to similar situations, while continuing to support member states through trade and development finance.
At the same time, analysts expect African sovereign shareholders to remain supportive of Afreximbank, given its strategic mandate, embedded legal protections and role in advancing intra-African trade under the African Continental Free Trade Area.
With Moody’s maintaining its investment-grade assessment of the bank, Afreximbank bonds remain eligible for inclusion in major investment-grade bond indices, including those tracked by JP Morgan.
Continued index inclusion is seen as critical for institutional demand, particularly among funds with strict mandate requirements.
JP Morgan analysts noted that as long as Afreximbank maintains its current standing with Moody’s, demand from benchmark-driven investors is expected to remain stable.
Afreximbank’s business profile remains underpinned by strong shareholder support from African governments, a robust capital base and legal protections in its Establishment Agreement.
Analysts view the recent market volatility as a reassessment rather than a deterioration of fundamentals, with the bank’s mandate and balance sheet strength continuing to differentiate it from conventional commercial lenders.
A Business Desk Report