Close-up of J.P. Morgan bank sign, highlighting the financial institution’s branding.
In a notable reversal, JP Morgan has upgraded its stance on African Export-Import Bank (Afreximbank) bonds to “overweight,” signaling a buy recommendation. This shift follows a sharp selloff triggered by rating agency Fitch’s decision to cut the bank’s credit rating to junk status last week. Fitch acted after Afreximbank agreed to take a loss on loans to Ghana, undermining its perceived “preferred creditor” immunity. The bank had earlier severed ties with the rating agency, which then withdrew its rating entirely after the downgrade. JP Morgan analysts argue the market reaction was overdone, creating an attractive entry point for investors. They believe Afreximbank can adjust its lending to avoid future sovereign debt pitfalls and will continue to receive supportive treatment from its African government shareholders. Crucially, the bonds will remain in key investment-grade indexes for now, as Moody’s—now the sole major rater—has not indicated a similar downgrade.
Reuters