Fitch Affirms African Development Bank at ‘AAA’, Outlook Stable
Fitch Ratings has affirmed African Development Bank’s (AfDB) Long-Term Issuer Default Rating (IDR) at ‘AAA’ with a stable outlook.
According to Fitch, AfDB’s ‘AAA’ rating is driven by the extraordinary support it receives from its non-regional shareholders, which analysts assess at ‘aaa’.
“We assess the bank’s Standalone Credit Profile (SCP) at ‘aa+’, reflecting our expectation that the bank will operate with ‘excellent’ capitalisation over the medium term and maintain a ‘low’ level of solvency risk”, Fitch said.
Ratings analysts assess extraordinary support available to AfDB at ‘aaa’, based on forecast that its net debt will be fully covered by callable capital from ‘AAA’ rated member states until at least end-2028.
“Our expectation reflects AfDB’s board of governors approving an UA88.1 billion increase in callable capital (GCCI), of which UA9 billion comes from ‘AAA’ rated shareholders, with all ‘AAA’ rated shareholders successfully subscribing to this GCCI by end-May 2026.
“The net debt coverage ratio, which had weakened to 127% at end-2023 from 217% at end-2022, is now over 160%”.
Fitch forecasts AfDB’s coverage to weaken over the next two years due to business growth, but the bank has the option to curb its projected lending growth to ease pressure on the coverage ratio, if needed.
The rating note said assessment of AfDB’s capitalisation remains ‘excellent’, despite both the usable-capital-to-risk-weighted-assets (FRA) ratio (57% vs. 59%) and equity-to-assets ratio (28% vs 30%) declining slightly at end-2025 relative to end-2024.
The bank continues to benefit from capital payments under the seventh general capital increase and the issuance of a further USD500 million of hybrid debt in September 2025, to which Fitch assigns 100% equity credit. However, its total assets grew by just over 14% in 2025, leading to a reduction in both ratios.
Fitch expects the bank to continue to operate with a FRA ratio comfortably above 35% and an equity to assets ratio just above 25%, the thresholds for ‘Excellent’, over the medium term.
However, ratings analyst said they expect both ratios to further decline from end-2025 levels, as the bank’s lending operations expand, coupled with a deterioration in the sovereign creditworthiness of some of the bank’s largest borrowers.
In its baseline, Fitch also assumes additional hybrid capital issuances of approximately USD1 billion over the next three years.
The weighted average rating of loans and guarantees before any adjustments for preferred credit status (PCS) was ‘B+’ at the of 2025, unchanged from previous years.
AfDB has implemented several schemes to reduce credit and concentration risk. Since January 2015, the bank has completed four Exposure Exchange Agreements (EEA), the latest being a USD3.2 billion exposure swap in April 2025 with Inter-American Development Bank.
Fitch said the bank’s risk transfer mechanism (Room2Run Sovereign) to cover USD2 billion of sovereign exposures, originated in 2022, also remains active.
AfDB’s PCS assessment reflects a strong record of sovereign loan performance, as demonstrated by the full repayments of arrears by Somalia in 2020 and Sudan in 2021.
Senegal , the bank’s seventh largest exposure after EEA adjustment, continues to make payments to AfDB despite facing domestic liquidity challenges currently, which further illustrates AfDB’s position as a preferential creditor.
Zimbabwe remains the only sovereign – accounting for 0.9% of total sovereign loans- in default with the bank. The strong PCS enhances the weighted average rating of loans and guarantees by two notches to ‘BB’.
AfDB’s non-performing loans (NPL) ratio, as defined by Fitch, increased slightly to 2.2% of total loans in 2025 from 1.9% in 2024. Zimbabwe remained the only sovereign in default, but the increase in non-sovereign NPLs to 9.9% at end-2025 from 7.9% in 2024 was the driver of the overall increase in NPLs across the bank’s loan portfolio.
Fitch said one of the larger non-sovereign borrowers in default at the end of 2025 had cleared its arrears by 1Q26, so the non-sovereign NPL rate had fallen closer to 6.5% by end-March 2026. Fitch expects the NPL ratio to remain close to its current level (1-3%) over the medium term, which is commensurate with a ‘low risk’ assessment.
Fitch believes the bank’s risk management policies are conservative and assesses them as ‘excellent’, in line with peers. Concentration risk is ‘low’ and benefits from EEAs with other multilateral development banks.
The five largest exposures accounted for 27% of total banking exposures after EEAs in 2025. Fitch expects equity participations to remain below 5% of the banking portfolio.
AfDB’s ‘aaa’ liquidity assessment reflects its ‘excellent’ liquidity buffers, the high quality of liquid assets and its reliable access to capital markets. At the end of 2025, liquid assets were 2.6x short-term debt. Around 77% of treasury assets were rated ‘AA-‘ and above.
Fitch assesses AfDB’s business environment as ‘medium risk’, balancing the ‘low risk’ business profile against the bank’s ‘high risk’ operating environment. The former primarily reflects the large size of the bank’s portfolio, the bank’s governance and the importance of its public mandate.
The ratings agency said AfDB’s ‘high risk’ operating environment is consistent with the low ratings, low income per capita and high political risk in the countries where it operates.
