…AGF is backed by public institutions including the African Development Bank (AfDB; AAA/Stable; 8.3%)
FRI, APRIL 24 2020-theG&BJournal-Fitch Ratings has affirmed the African Guarantee Fund for Small and Medium-sized Enterprises Ltd’s (AGF) Insurer Financial Strength (IFS) Rating at ‘AA-‘ (Very Strong). The Outlook is Stable.
AGF is backed by public institutions, but it is run on a commercial basis, allowing shareholders to support the financing of SMEs in Africa without directly committing their own funds. It is owned by the development agencies of Denmark (DANIDA; AAA/Stable; 20.3% at end-2019), Spain (A-/Stable; 11.1%) and France (AA/Stable; 7.8%) and by KfW (AAA/Stable; 34.3%), the Nordic Development Fund (NDF; 9.5%), the Danish Investment Fund for Developing Countries (IFU; 8.6%) and the African Development Bank (AfDB; AAA/Stable; 8.3%).
In Fitch’s coronavirus stress testing AGF’s net par-to-capital ratio, which stood at 1.1x at end-2018 and which Fitch expects to have increased in 2019, remains below the agency’s downgrade sensitivity of 2.5x on a pro-forma basis for 2020.
AGF plans to further expand its paid-in capital base via capital increases and subordinated debt from its current owners, other highly rated development finance institutions and non-government organisations. Fitch expects capitalisation to remain commensurate with the rating and financial leverage to not exceed 20%.
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