We Could Revise Ecobank Nigeria’s Outlook If…S&P Global
S&P Global Ratings has said it could revise the outlook to stable if Ecobank Nigeria successfully implements its capital-boosting measures or achieves significant recoveries on its FX-denominated loans within the next six months.
“If the bank receives the capital injection from its parent within the next couple of months, we anticipate that it will no longer be in breach of the minimum CAR. This would probably remove the risk associated with the bond acceleration.
“If it does not receive the promised support, we think default appears inevitable. Therefore, we revised Ecobank Nigeria’s stand-alone credit profile (SACP) to ‘cc’ from ‘ccc’.”, the report stated.
Ecobank Nigeria has announced a tender offer to buy back $150 million, or half of its outstanding senior unsecured Eurobond at par, together with accrued interest.
The offer includes an early tender premium of $12.5 per $1,000 of the principal amount (1.25%) and the most likely settlement date will be July 8, 2025. The bank is also soliciting consent from its noteholders to remove the capital adequacy covenant on the remaining notes.
The bank is offering an early consent fee of $2.50 per $1,000 of the principal amount. The covenant was previously waived until Sept. 30, 2025. To reinforce its capital adequacy, rating analysts expect Ecobank Nigeria to pursue additional measures, such as issuing an additional $150 million in AT1 instruments.
That said, the uncertain economic environment could make it more difficult to boost capital by such means. “We believe that a default or a distressed exchange appears inevitable within the next six months, unless the bank can successfully bolster its capital or recover significant amounts from loans denominated in foreign currencies (FX).”
Ratings analysts do not consider the current bond buyback and the permanent removal of the covenant to constitute a distressed debt restructuring.
“In our view, noteholders are still receiving about the same value as they were originally promised. Removing the covenant changes the terms and conditions of the outstanding bond after the buyback”. S&P Global said the principal amount, interest rate, timing of payment (without a potential acceleration), and debt ranking remain unchanged.
If the bank receives the capital injection from its parent within the next couple of months, S&P analysts anticipate that it will no longer be in breach of the minimum CAR. This would probably remove the risk associated with the bond acceleration. If it does not receive the promised support, analysts think default appears inevitable.
Ecobank Nigeria’s stand-alone credit profile (SACP) was lowered to ‘cc’ from ‘ccc,’ reflecting the view that a default or a distressed exchange appears to be inevitable within six months.
This is expected to happen unless Ecobank Nigeria receives the expected capital injection from its parent, ETI, while also implementing other capital-boosting measures successfully or achieving significant recoveries on its FX-denominated loans.
“We would lower the rating on the bank to ‘CC’ in the next six months if ETI does not provide a capital injection or if it fails to implement other capital-boosting measures. Either would put its liquidity under pressure and could push the bank to default in February 2026, when the Eurobond is due. Ghana Drives Intra-African Trade Under AfCFTA
