Moody’s Withdraws African Bank’s Ratings: All Assessments Removed in ZA

• Moody's Ratings officially withdrew all ratings for African Bank on Thursday.
• The withdrawal was initiated at African Bank's request, following its prior announcement to terminate the relationship.
• African Bank maintains its rating relationship with S&P Global Ratings.
• The Prudential Authority plans to derecognize Moody's Investors Service South Africa, requiring banks to transition from local Moody's ratings by April 2028.
• Moody's previously gave up its local regulatory license to focus on cross-border investors, without affecting South Africa's sovereign credit rating.

The rating agency clarified that its decision to withdraw these ratings followed a thorough review of African Bank's request to terminate its rating relationship.

Moody's Ratings officially withdrew all ratings for African Bank on Thursday, a move confirmed by the New York-based rating agency in a public statement. This comprehensive withdrawal encompasses a range of assessments previously assigned to the South African financial institution. Specifically, the affected ratings include the Ba2/NP long- and short-term deposit ratings, the Ba1/NP long- and short-term Counterparty Risk Ratings (CRR), and the Ba1(cr)/NP(cr) long- and short-term Counterparty Risk (CR) assessments. Additionally, African Bank's b1 Baseline Credit Assessment (BCA) and b1 Adjusted BCA were also removed.

The rating agency clarified that its decision to withdraw these ratings followed a thorough review of African Bank's request to terminate its rating relationship. This action comes nearly a week after African Bank itself disclosed its intention to end its engagement with Moody's through a SENS filing. Despite this development, African Bank maintains an ongoing rating agency relationship with S&P Global Ratings, ensuring continued external credit assessment coverage. Prior to the withdrawal, the outlook on African Bank’s long-term deposit ratings had been assessed as stable.

The ratings that have been withdrawn by Moody's for African Bank were part of its National Scale Credit Ratings (NSRs) framework. These NSRs serve as a crucial tool for evaluating the creditworthiness of debt issues and issuers specifically within a particular country, offering market participants a more granular understanding of relative risks in that local context. Unlike Moody's global scale credit ratings, which are designed for worldwide comparability across all rated entities, NSRs are not intended to be globally benchmarked. Instead, their utility lies in enabling differentiation of relative risks solely among other rated debt issues and issuers within the same national economy.

This withdrawal occurs amidst a broader shift in the regulatory environment for credit rating agencies in South Africa. The Prudential Authority has signaled its intention to derecognize Moody's Investors Service South Africa as an eligible external credit assessment institution. This regulatory change will have significant implications for local banks, which have been granted a 24-month transition period, commencing from the April 2026 notice, to continue utilizing existing local Moody's ratings for purposes of regulatory capital calculations and risk-weighting. Following this period, financial institutions will be required to transition to alternative providers for these critical assessments.

Moody's had previously announced its decision to relinquish the regulatory license of its South African subsidiary. The agency stated that this strategic move was made to enable it to concentrate its efforts on serving cross-border investors and African issuers who are actively seeking to attract international funding. It is important to note that this local deregistration and the subsequent withdrawal of specific ratings for entities like African Bank will not have any bearing on how Moody's assesses and rates South Africa's sovereign credit, which remains a separate and distinct evaluation.

Source: Original reporting via Moneyweb