JPMorgan Chase & Co. has shifted its stance on bonds issued by the African Export‑Import Bank (Afreximbank), upgrading its view from underweight to overweight after a sharp selloff tied to a controversial credit rating downgrade, analysts said on Monday.
The decision reflects JPMorgan analysts’ belief that recent market weakness has made Afreximbank’s debt undervalued and attractive relative to benchmarks, prompting a recommendation that investors consider buying the bonds.
The selloff was triggered last week when Fitch Ratings downgraded Afreximbank’s credit rating to “junk” status, citing concerns about the lender’s exposure to distressed sovereign borrowers, particularly debt owed by Ghana. In response, Afreximbank severed its relationship with Fitch, leading the agency to withdraw its rating entirely.
With Fitch no longer rating the bank, Moody’s remains the sole major agency providing a credit assessment, and JPMorgan noted Moody’s has not signalled any imminent changes to its outlook. As a result, Afreximbank’s bonds continue to qualify for inclusion in JPMorgan’s influential investment‑grade bond indexes, a factor that could support demand from index‑linked investors.
Analysts at JPMorgan said the selloff widened spreads on Afreximbank’s debt to levels that now compensate investors for risk, even if the bank becomes involved in future sovereign debt restructurings. They also expressed confidence that Afreximbank can adjust its lending strategy to mitigate exposure to such risks and should continue receiving support from its main shareholders, African governments.
The move underscores growing investor interest in African issuers’ debt despite volatility tied to sovereign credit risks and the evolving treatment of multilateral institutions by global rating agencies.
