ATI secures second investment grade rating: ‘A3/Stable’ from Moody’s – adding to S&P’s decade-long ‘A/Stable’ rating - African Trade Insurance Agency

ATI secures second investment grade rating: ‘A3/Stable’ from Moody’s – adding to S&P’s decade-long ‘A/Stable’ rating

  • Securing a rating from Moody’s is part of ATI’s medium-term risk management and oversight strategy to obtain objective analyses and ongoing monitoring from two of the world’s most respected and trusted rating agencies: S&P and Moody’s
  • ATI’s commitment to transparency is reflected in the publication of this second investment grade rating. ATI believes this will aid its ability to help member states access more competitively-priced and longer-term lending options in international markets
  • ATI’s robust investment grade credit rating can essentially substitute for the sub-investment grade rating of its member countries. This allows African sovereigns to receive more favourable lending terms thereby decreasing the accumulation of African sovereign debt

NAIROBI, 09 May, 2019 – The African Trade Insurance Agency (ATI), today announced that is has secured an A3/Stable IFS rating from Moody’s based on its strong capitalization and liquidity amongst other criteria. The rating stands alongside S&P’s ‘A/Stable’ rating, which ATI has maintained for over a decade. Securing a second rating is part of ATI’s medium-term strategy to further strengthen its governance and oversight mechanisms and to enable ATI to provide better support to its member countries.

The Moody’s rating is another critical layer of ATI’s strategy to provide greater support to its member states. ATI’s investment grade rating can, through the application of ATI’s insurance products, act as a substitute for the often sub-investment grade ratings of its member countries. Amongst other benefits, this allows ATI’s African member countries to borrow for longer and for less, thereby helping them improve the management of their debt profiles.

External ratings often impact the cost of financing for governments and companies. For instance, the benchmark 10-year Government bond issued by countries with high investment grade ratings attract low interest rates of less than 2.50%, whereas single-B rated countries can receive rates above 8%, which adds considerably to a government’s sovereign debt burden.

According to Moody’s report, its A3/Stable IFS rating of ATI reflects:

  • ATI’s strong capitalization and liquidity relative to its insured exposures,
  • High quality and conservative investment portfolio,
  • Strong relationships with a number of global reinsurers that provide significant risk-bearing capacity,
  • Good market position and reputation in originating role in facilitating investment into Africa, and
  • Strong underwriting profitability.

The report also mentions the importance of ATI’s Preferred Creditor Status as a moderating influence on ATI’s exposure to defaults.

In addition, Moody’s notes that ATI could qualify for an upgraded rating with an increase in its membership base and participation by larger African countries (such as Ghana and Nigeria, both of which ATI expects will complete membership in 2019) continued strong underwriting performance and ability to recover claims under the PCS; and an enhancement of ATI’s enterprise risk management framework.

QUOTE from George Otieno, CEO of ATI

“ATI recognizes the importance of the oversight that ratings agencies provide and relies on the objective opinions of internationally reputable agencies such as Moody’s to provide a fair and impartial view of ATI’s credit risk. ATI is committed to transparency and external ratings are crucial to ATI’s ability to fulfil its mandate of helping to attract investors to the region. We are proud to count Moody’s as our newest rating agency alongside our decade-long partnership with S&P. This places ATI in a position of even greater credibility and financial strength as we strive to continue to support the evolution of Africa into one of the world’s most attractive and competitive destinations for global investors.”

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