Kirkinis still standing despite another body blow

JUST when you think things can’t get any worse for punch-drunk African Bank CEO Leon Kirkinis, his bank gets smacked again.

Late on Thursday, ratings agency Moody’s downgraded Abil’s local and international debt ratings as well as its financial-strength rating.

Although analysts expected the downgrade after the bank’s poor results last week, the share price still shed 6.77% on Friday, underscoring a 47% drop in the last year.

Moody’s said the downgrade reflected a “greater-than-initially anticipated deterioration in the bank’s asset quality”.

Shareholders, including Coronation Asset Management which recently bought 22% of the bank, would be concerned that the ratings placed Abil’s international debt into the “junk” grade Ba1.

However, the bank appeared to play this down in its stock exchange announcement. It said: “African Bank maintains its national-scale investment grade rating. In addi- tion, the long-term ratings have been placed on review”.

When asked, Kirkinis said it is “inaccurate and irresponsible” to categorise the new rating as “junk status”, saying it was simply “noninvestment grade speculative”.

However, Moody’s analyst Christos Theofilou said: “Anything at or below Ba1 we refer to internally as sub-investment grade but the market does have its descriptors including ‘junk’ and ‘speculative’.”

A bigger concern was that the downgrade could spook Abil’s fun- ders. Foreign investors, largely Swiss companies, hold about $1,35billion in foreign-currency bonds.

But Kirkinis said the downgrade would not have a major effect on Abil’s funding.

“We are actively engaged with our funding partners, and do not expect a knee-jerk reaction from them,” he said.

Kirkinis said these funders were “aware of the operational turnaround that has already gained significant traction ... and have expressed confidence in our ability”.