International credit watcher S&P Global Ratings affirmed on Thursday the Asian Development Bank’s (ADB) credit rating on the back of the bank’s “extremely strong enterprise and financial risk profiles”.
S&P said ABD remains rated at AAA with a stable outlook at it “responded strongly” to its borrowing members’ financing needs stemming from the COVID-19 pandemic.
“The COVID-19 pandemic has strengthened ADB’s role as a countercyclical lender…AsDB’s commitments nearly tripled compared with pre-crisis lending expectations,” S&P said.
In response to the pandemic, ADB launched a $20 billion financing package in April last year, which includes a $13 billion COVID-19 Pandemic Response Option under its Countercyclical Support Facility.
ADB also unveiled a $9 billion vaccine facility in December 2020 to support the purchase and delivery of vaccines in the Asia-Pacific region.
S&P said ADB’s ability to provide financing needs was largely strengthened by the regional banking giant’s initiative to groundbreaking initiative to combine the lending operations of the bank’s Asian Development Fund (ADF) with its ordinary capital resources (OCR) balance sheet.”
“In our view, this enhanced ability to respond quickly with larger lending is a result of the successful merger of ADB’s OCR window with the ADF in 2017. The transfer of ADF assets to the bank’s OCR window has drastically boosted ADB’s total lending capacity due to the addition of non leveraged ADF equity to the OCR.
The combined account’s equity has nearly tripled to approximately $52.7 billion as of Sept 30 last year.
“The stable outlook on ADB reflects our expectation that the bank will maintain its extremely strong enterprise risk profile with borrowers treating AsDB as a preferred creditor,” S&P said.
“In addition, we view the extensive capital buffers as anchoring the extremely strong financial risk profile. Our base case indicates a low probability that we would lower our issuer credit ratings on the bank over the next 24 months,” it added.
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