On July 30, 2024, ETC – Export Trading Cooperation, received the A3- rating from the European credit rating agency ModeFinance for the fourth consecutive year. This recognition reaffirms the strength of our financial position and our ability to meet our commitments, a key factor of trust for all our financial and commercial partners.
The Significance of the A3- Rating
The A3- rating awarded by ModeFinance is a recognition of ETC’s stability and financial performance. Such a rating indicates our ability to meet our obligations as a guarantor, even in adverse economic conditions. This evaluation is based on a detailed analysis of our financial performance, risk management, and governance structure.
For our clients and partners, this rating is more than just a financial indicator. It represents an assurance that transactions conducted with ETC are based on a solid foundation, thus minimizing the risks associated with collaboration. Whether for investment, trade, or market projects, the A3- rating signifies that ETC is a reliable partner capable of providing stable and secure solutions.
ModeFinance: An External Credit Assessment Institution (ECAI) Recognized by the European Securities and Markets Authority (ESMA)
Founded in 2009 in Italy, ModeFinance is a well-known External Credit Assessment Institution (ECAI) recognized for its innovative and technological approach to credit risk assessment. Their use of proprietary algorithms ensures accurate and transparent ratings, giving their evaluations international recognition and reliability. As such, the European Securities and Markets Authority (ESMA) approved the registration of ModeFinance as an ECAI as of July 10, 2015. This registration allows ModeFinance’s credit ratings to be used for regulatory purposes within the European Union and, by extension, in all banking systems that have ratified the Basel principles.
According to the Commission Implementing Regulation (EU) 2021/2006 of November 16, 2021, which defines the implementing technical standards amending Implementing Regulation (EU) 2016/1800 on the mapping of credit assessments of External Credit Assessment Institutions under the Directive 2009/138/EC of the European Parliament and of the Council, the (A3) rating granted to ETC by ModeFinance is equivalent to the (A) rating from global rating agencies (Moody’s Investors Service, S&P Global Ratings, Fitch Ratings Ireland Limited, and Dominion Bond Rating Service DBRS), specifically corresponding to the Credit Quality Step 2 (CQS 2).
What This Means for Our Clients
For financial institutions and companies that choose to collaborate with ETC, the A3- rating offers several tangible benefits:
- Reduction of Risk-Weighted Assets (RWA): The A3- rating assigned to ETC is an indication of its financial strength and its ability to meet its commitments. African banks that use external ratings to calculate their RWA can benefit from a reduction in risk weighting when dealing with ETC. A better rating generally translates into a lower risk weighting, reducing the amount of capital that banks need to set aside to cover exposures guaranteed by ETC.
- Optimization of Regulatory Capital: Due to the lower weighting of risk-weighted assets (RWA), African banks can optimize their regulatory capital. This means they can allocate less capital to cover the risks associated with transactions involving ETC, thereby freeing up resources for other investments or loans.
- Compliance with Prudential Standards: African banks operating in countries that have adopted the Basel principles must comply with capital requirements. By using ETC’s A3- rating, these banks can demonstrate that they follow international best practices in risk management, which can also enhance their reputation and financial stability.
In summary, the international recognition of ETC’s A3- rating enables African banks to better manage their portfolio exposures, optimize their capital, and comply with prudential standards, which is essential for their competitiveness and growth in the financial sector.
By maintaining our A3- rating for the third consecutive year, ETC confirms its position as a trusted leader in African markets. This recognition reflects our commitment to providing solid and appropriate financial instruments, thus supporting trade and investment for responsible growth on the continent.
