BAI – Banco Angolano de Investimentos said today that the rating agency Fitch “recognises the systemic importance of BAI” in the Angolan financial system, following the improvement of the outlook on the bank’s rating.
The Fitch Ratings agency said it had changed BAI’s rating from “Stable” to “Positive,” at the same time as it set the long-term debt rating at ‘B-‘,” said the statement issued today in Luanda, which comes after, on 15 July, Fitch had improved the outlook for the evolution of Angola’s rating.
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“Fitch recognizes BAI’s systemic importance, its position as Angola’s leading private bank and its strategic role in financing and supporting the strategic oil industry,” BAI said, also noting that “for Fitch, this change reflects Angola’s large fiscal surpluses, the fruits of a combination of higher oil prices, expenditure restraint and a sharp decline in public debt, driven by the appreciation of the Kwanza and a history of stability-oriented economic reforms.”
On July 15, Fitch Ratings, owned by the same owners of Fitch Solutions, announced that it had revised the outlook on Angola’s rating from Stable to Positive, suggesting an increase in opinion on the sovereign credit quality of this Lusophone country.
“Fitch said in a statement that accompanied the explanation of the change in the outlook of the rating, which is maintained at B-, below the investment grade recommendation level.
After five years of economic recession, Angola is expected to grow 2.8 percent this year and 3.4 percent in 2023, “driven mainly by the non-oil sector, reflecting the easing of pandemic-related restrictions and increased dollar liquidity, in addition to a significant improvement in economic sentiment,” the analysts concluded.
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The placement of a rating on a Positive Outlook means that if current conditions continue or improve, the rating will be revised upwards, normally within a timeframe that ranges from six to 18 months, but can be brought forward.
Fitch Ratings assigns Angola a sovereign credit quality opinion of B-, below investment grade, or ‘junk’ as it is generally known, meaning that investment in this country is risky.
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“The B ‘rating’ indicates that there is a material risk of financial default, but a limited safety margin exists; financial commitments are being met, but the ability to maintain payments is vulnerable to deteriorating economic and business conditions,” according to Fitch Ratings’ definition of the B-level.
