AIIB Receives Triple A Credit Rating
Fitch Ratings has given the Chinese backed Asian Infrastructure Investment Bank (AIIB ) its highest credit rating of AAA, following on from last month’s similar AAA rating from Moody’s.
Fitch said in a statement that the rating is based on AIIB’s “existing and expected intrinsic strengths”, adding that “AIIB has been endowed with a substantial capital base, which in Fitch’s view, will support the projected rapid expansion in lending; exposure to risk will be mitigated by a comprehensive set of policies and by high quality governance”.
“The rating is very critical for our positioning in the international capital markets. It puts us at the very level of the World Bank and the IMF,” Soren Elbech, treasurer of the AIIB, stated.
Beijing-based AIIB was officially established in December 2015, and opened its doors for business in January 2016. It is a multilateral development bank initiated by China and supported by 80 member countries and regions to finance infrastructure improvement in Asia, and serves as a key financing mechanism for the China-proposed Belt and Road Initiative.
To date, the bank has approved US$2.49 billion in financing for 16 infrastructure projects in nine countries, although there has been criticism of the low extent of the bank’s lending portfolio thus far. It’s most recent project has been providing finance to India’s Investment Fund, with two out of three of its projects with the World Bank and Asian Development Bank as partners. The largest stakeholders in the AIIB are China, India, and Russia.
Chris Devonshire-Ellis of Dezan Shira & Associates comments “The high credit ratings are no surprise given that the bank is funded by 77 sovereign nations. It remains to be seen, however, if the true aim of the AIIB is to be targeted financing of Asian infrastructure projects or whether it remains a promotional flagship designed to showcase prudent financial management from Beijing. It should not be forgotten that much OBOR financing from China is issued via its secondary channels of State Owned Banks and SOEs. This remains opaque and would not stand up to audit scrutiny. Quite how a Triple A rated Chinese bank can sit healthily alongside other state funding mechanisms remains to be seen.”
Silk Road Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Asian and Eurasian region. We maintain offices throughout China, South-East Asia, India and Russia. For assistance with OBOR issues or investments into any of the featured countries, please contact us at email@example.com or visit us at www.dezshira.com
Silk Road and OBOR Business Intelligence
Dezan Shira & Associates´ Silk Road and OBOR investment brochure offers an introduction to the region and an overview of the services provided by the firm. It is Dezan Shira´s mission to guide investors through the Silk Road´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.
China’s New Economic Silk Road
This unique and currently only available study into the proposed Silk Road Economic Belt examines the institutional, financial and infrastructure projects that are currently underway and in the planning stage across the entire region. Covering over 60 countries, this book explores the regional reforms, potential problems, opportunities and longer term impact that the Silk Road will have upon Asia, Africa, the Middle East, Europe and the United States.
China’s AIIB – The Facts To Know
Financing China’s One Belt, One Road: US$8 Trillion in Capital Requirements