Moody's rates East African Development Ba1

Moody's Investors Service said it assigned a Ba1 rating to the long-term foreign currency debt of East African Development Bank.

The outlook is stable.

Moody's said the Ba1 rating is based on:

• Improved governance and risk-management policies and capabilities, combined with a very strong liquidity position, supporting the bank's resiliency to shocks, especially in light of the expected expansion of its balance sheet;

• Moderate level of capital adequacy, supported by the strengthening of its capital base, counterbalancing its weak asset quality, as reflected by its high level of non-performing loans on par with similarly rated peers; and

• Strong shareholder support, as evidenced by 2007 capital commitment. However, the average credit quality of the shareholders themselves is relatively poor which leads Moody's to assess their ability to support the bank in a timely manner as being low. This risk is partially mitigated by the presence of the Aaa-rated African Development Bank, which recently increased its participation in the bank, both in terms of paid-in and callable capital.

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