Moody’s Affirms Bank of Industry’s B3 Ratings; Outlook Stable
Moody’s Ratings has today affirmed Bank of Industry Limited’s (BOI) long-term issuer ratings and long-term corporate family rating at B3.
The global ratings agency also affirmed its short-term issuer ratings at Not Prime (NP) and national scale long- and short-term issuer ratings at A3.ng/NG-2.
The outlook for Bank of Industry Limited remains stable, according to Moody’s. As part of the same rating action, ratings analysts have affirmed the senior secured rating of BOI Finance B.V., its funding vehicle, at B3; the outlook remains stable.
“Our decision to affirm BOI’s B3 corporate family rating (CFR) and B3 long-term issuer ratings reflects its stable financial performance as well as the strong interlinkages between the company’s balance sheet and the sovereign’s creditworthiness”, Moody’s said.
It added that the CFR is aligned with the company’s b3 standalone assessment which is constrained by the Nigerian sovereign rating (B3 stable) given the high interlinkages between the sovereign’s creditworthiness and the company’s balance sheet.
These interlinkages arise because the entirety of BOI’s assets are located in Nigeria, and BOI is also heavily exposed to the government and the central bank via its debt securities holdings and foreign currency swaps.
Moody’s said BOI’s B3 issuer ratings are aligned with the CFR, reflecting the absence of the structural subordination of unsecured obligations under our Loss Given Default (LGD) model.
According to Moody’s, BOI’s b3 standalone assessment reflects the company’s robust capital buffers, solid earnings generation, sound loan performance, and the collateralisation of its loan book, with more than 90% of loans secured by bank guarantees or federal government bonds.
These strengths are moderated by the still fragile operating environment; the company’s developmental mandate, which poses risks to asset quality and profitability; and its sizeable reliance on wholesale funding in foreign currency – partly moderated by central bank swaps and the fact that a sizeable portion of that funding is sourced from development finance institutions.
BOI’s A3.ng/NG-2 national scale issuer ratings are derived from its global scale issuer ratings.
The ratings demonstrate that BOI remains one of the stronger credits in the country, primarily reflecting its close links with the government, its robust capital buffers, and resilient financial performance, but also its exposure to a risky client base as it pursues its developmental mandate.
BOI’s stable outlook is aligned with the stable sovereign outlook and reflects that its ratings are constrained by Nigeria’s sovereign ratings.
The stable outlook further reflects our expectation that BOI’s financial performance and key financial metrics will remain resilient despite the country’s still fragile operating conditions. MarketNews
