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ATI's credit rating upheld on expanding shareholder base

ATI chief executive George Otieno.
ATI chief executive George Otieno. PHOTO | DIANA NGILA   

Global credit rating agency Standard & Poor’s has affirmed the African Trade Insurance Agency (ATI), issuer credit rating at “A” as well as accorded it a “stable” outlook.

S&P cited ATI’s increased market penetration, expanding shareholder base, and an expectation of continued expansion and stabilisation of its preferred creditor status. The investment risk insurer is owned by 14 African nations and other organisations such as the African Development Bank—with a total of 23 paid-up shareholders.

Its shareholder base has grown from seven initial member countries to 14 fully-fledged member countries to date. In the past two years Ethiopia, Cote d’Ivoire, South Sudan and Zimbabwe have joined. Another five prospective new members are in the pipeline, including Nigeria and Ghana.

“ATI’s expansion and relevance in the region is bolstered by its strong shareholder support… we expect this momentum to continue over the medium term,” said the ratings agency. \In 2016 ATI implemented a series of measures that include mandatory notifications and no objection requests for political risk insurance transactions as well as strengthening strategic partnerships with member countries.

ATI said it also expects to hire “key staff to strengthen its risk management function.”

“Expansion and prudent risk management have been key pieces of our strategy for some time,” said ATI’s chief executive officer George Otieno.

ATI was formed in 2001 with World Bank support to offer insurance for large investment and financing projects against risks such as sovereign default, war and insolvency, to spur investments in Africa.

S&P’s however raised a concern that ATI could be constrained by the potential pace of sovereign recoveries and member government’s treatment of ATI’s preferred creditor status, which is meant to ensure automatic reimbursement by governments for any sovereign claims incurred.

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