Moody's eyes BOAD for downgrade

Moody's Investors Service said it placed the West African Development Bank's (BOAD) Baa1 long-term issuer and senior unsecured debt ratings on review for downgrade.

Moody's decision to place BOAD's ratings on review for downgrade reflects pressure on the bank's asset quality as a result of its incapacity to collect payments from all borrowers based in government of Mali (Caa2 review for downgrade) due to ongoing sanctions imposed on the country by regional institutions. Downside risks to the bank's capital adequacy also stem from broader political instability in parts of its region of operation.

“While BOAD may receive further support from its shareholders to attenuate deterioration in its capital adequacy, such policy response remains uncertain in terms of scale and timing,” the agency said in a press release.

Moody’s said it plans to evaluate the scope to which asset quality will deteriorate because of extended sanctions on Mali and an increasingly difficult operating environment, but also the effectiveness of the possible policy response from the West African Economic and Monetary Union at helping BOAD's capital position.

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