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Moody's downgrades ECOWAS Bank for Investment and Development

Moody's on May 17 downgraded Banque d'investissement et de développement de la CEDEAO's long-term issuer rating to B2 from B1, with a negative outlook on the rating.

The downgrade reflects Moody's assessment of the Togo-based bank's liquidity as very weak. In the absence of a comprehensive liquidity management policy, which has been delayed repeatedly, weak liquidity poses significant risks that are more proportionate with a lower rating, according to the agency.

Additionally, slower-than-expected clearance of arrears in shareholders' capital contribution reflect weak investor commitment to the lender's development mandate, while capital adequacy remains weak despite relatively low leverage.

The negative outlook is based on the risks associated with the bank's future liquidity at a time when it intends increased recourse to market funding sources to expansion plans.

ECOWAS Bank for Investment and Development is the development banking arm of the Economic Community of West African States, a 15-member economic community created in 1975.