PTA Bank’s ability to finance projects and raise funds in the international money markets has received a shot in the arm following new rating accorded by a top international rating agency.
The Eastern and Southern African Trade and Development bank has been assigned a Double B minus (BB-) long term rating by Fitch Ratings, one of the top three international rating agencies.
According to the bank’s president, Dr Michael Gondwe, the new rating is proof that the bank is on the way to becoming a global bank.
Fitch Ratings is a global rating agency committed to providing the world’s credit markets with independent and prospective credit opinions, research, and data.
Fitch Ratings is widely recognised by investors, issuers and bankers for its credible, transparent and timely coverage.
The strong support from China and AfDB enabled the bank to acquire the new rating.
The two shareholders, among others, subscribed to the Bank’s callable capital, which was recently enhanced following the bank’s first general capital increase.
Although Fitch says that some of the shareholders have weak ratings, the strong support from China and ADB weighs heavily in favour of a good rating.
“This means that they are committed to injecting more capital in case of need,” says Fitch in its report on the bank. Callable capital has been increased from 66.6 per cent to 80 per cent of total capital.
“The success of the 2007 capital increase is evidence of shareholders’ willingness to support the bank,” added Fitch.
The new rating, now places PTA Bank higher than Common Markets for Eastern and Southern Africa countries which have been rated by the agency — Kenya (B+), Malawi (B-) Rwanda (B), and Uganda (B).
In addition, the rating is a notch below that of the Development Bank of South Africa, one of the continent’s leading development financial institutions, which has been rated BBB+.
“PTA Bank credit rating relies largely on the support from its shareholders and also takes into account the strong capitalisation and high liquidity of the bank,” says Fitch.
Last year, the bank’s shareholders agreed to increase the bank’s authorized capital base to US dollars 2 billion while the paid in capital was doubled to US dollars 236 million.
During the year, the Bank also received a US dollars 100 million financial package from the African Development Bank, in the form of a $50 million line of credit, a $1.6 million technical assistance facility, and the rest in terms of paid-in and callable capital commitment.
“We believe that these facilities will help us weather the current global credit crunch in addition to strengthening the Bank’s regional presence through its intervention in various markets in the eastern and southern African region,” says Dr Gondwe.
The PTA Bank counts among its shareholders seventeen African countries in addition to the People’s Republic of China and the African Development Bank, the institutional shareholder.
Both China and ADB hold a 12.3 percent shareholding in the Bank.
The PTA Bank is the financial arm of COMESA but membership is open to non-COMESA States and other institutional shareholders.
The PTA Bank membership comprises seventeen member states, sixteen of which are COMESA members: Burundi, China, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tanzania, Uganda, Zambia, Zimbabwe. China is the first non-regional member state to join the PTA Bank in 2000. ADB is the institutional shareholder.