The AIIB's capital base will most likely remain very large in relation to its assets as its balance sheet continues to grow over the next 10 years. Subscribed capital is already larger than more established Aaa-rated multilateral development banks (MDBs), and will provide ample financial capacity to fulfill the AIIB's mandate to invest in infrastructure in Asia.
We also expect the AIIB's development assets and related borrowings to expand at a pace that contains leverage, while its policies will be designed and implemented in a manner that mitigates credit risk and preserves profitability.
Strong asset performance will be supported by preferred creditor status, similar to other MDBs. At the same time, the Bank's conservative liquidity policy will be complemented by what is likely to be strong access to funding markets.
The AIIB's "Very High" capital adequacy primarily reflects its large capital base currently, as well as our expectation that over the next decade, it will maintain ample capital coverage relative to its development exposures, modest leverage, and robust asset performance consistent with our assumption that the Bank will benefit from preferred creditor status.
The Bank's "Very High" liquidity reflects our expectation that it will strictly adhere to its liquidity policy and the development of a robust funding franchise over time.
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In addition, we assess the willingness and ability of the AIIB's members to provide extraordinary support to the organization in times of need as "Very High," based our assumption of the AIIB's members very high willingness and strong ability to provide financial support as reflected in relatively high members' sovereign ratings on average.
The stable outlook reflects our expectation that the AIIB will maintain the strength of its standalone credit metrics beyond its initial growth phase into the next decade.
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