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Afrexim says it is exempt from losses, others disagree

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Dispute underscores "grey zone" around multilateral

lenders

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Any payments could impact bondholder, official creditor

deals

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Ghana, Zambia have said they will restructure Afrexim

loans

By Karin Strohecker and Libby George

LONDON, May 29 (Reuters) - Afreximbank has signalled

that Ghana has kept up loan repayments to it, two sources told

Reuters, potentially setting Accra on a collision course with

its other lenders that have already agreed to take losses to

help the country recover from default.

The African lender, the sources said, told investors on a

May 15 call that Ghana and Malawi - which is also undergoing a

debt restructuring - were "up to date" with their loan

facilities, suggesting neither country had run up arrears.

While Ghana's restructuring of $13 billion worth of

international bonds and debts to official creditors concluded

last year, it must also restructure its commercial debt before

it can fully emerge from default.

Afreximbank says it is a multilateral institution which,

like the IMF and the World Bank, is exempt from taking losses

when countries default.

But sources told Reuters last month that the Paris Club

group of official lenders has made it clear that Ghana, and also

Zambia which similarly agreed a deal with its primary creditors

last year, must restructure their debts to Afreximbank and the

Eastern and Southern African Trade and Development Bank (TDB).

Ghana said in a statement on Thursday that it remained in

arrears with all external creditors eligible for restructuring

and that no creditor had been treated preferentially. The

government told Bloomberg last week that it would restructure

the Afreximbank loans.

Afreximbank declined to comment beyond a May 21 statement

saying it was not participating in debt restructurings with

member countries.

Ghana defaulted in 2022, spurring the worst economic crisis

in a generation against the backdrop of the COVID pandemic,

Russia's invasion of Ukraine and higher global interest rates.

The gold, cocoa and oil-producing nation owes Afreximbank at

least $750 million, which, if counted as commercial debt, would

make up almost a quarter of the country's near $4 billion of

such loans, according to think tank ODI Global.

It is unclear when Ghana and Malawi were due to make

payments to Afreximbank. The timing is particularly pertinent

for Ghana after it included a clause in international bonds

issued late last year as part of its debt rework stipulating it

cannot treat commercial creditors better than its bondholders.

"Zambia, Ghana and Malawi are caught in the middle between

different creditors," said Chris Humphrey, a senior research

associate with ODI, adding that "they're being forced to make a

difficult decision".

Malawi and Zambia did not immediately respond to requests

for comment. Zambia has also told other media that it would

restructure Afreximbank debt.

LENDER OF LAST RESORT

Afreximbank, with a $42 billion balance sheet and

shareholders including governments and private investors, is an

important lender to the continent, particularly as concessional

finance and aid funding shrink.

If Afreximbank's loans are deemed eligible for

restructuring, its credit rating could be affected, in turn

pushing up its own borrowing costs, its investors said.

Fitch rates the lender 'BBB' and Moody's 'Baa1'.

Afreximbank said in its first-quarter report that for its

$27.8 billion loan book, its non-performing loans ratio was

2.44%, without identifying individual clients.

Fitch warned last year that an NPL ratio above 6% was among

factors that could lead to a negative rating action or

downgrade.

While some of its lending is at rates above those that are

widely considered concessional terms, some point to

Afreximbank's willingness to step in as a lender of last resort

at times of strife for countries such as Ghana.

Accra paid as much as 9.55% to the lender for parts of its

loan arranged in 2022, shortly before it tumbled into default.