SAT. 18 FEB, 2023-theGBJournal| Moody’s Investors Service (Moody’s) Friday affirmed the B3 long-term issuer ratings of Ecobank Transnational Incorporated (ETI), and at the same time, changed the outlook to negative from stable on the group’s long-term issuer and senior unsecured debt ratings.
The Not Prime short-term issuer ratings, the B3 senior unsecured foreign currency rating, the b2 Baseline Credit Assessment (BCA) and the b1 Adjusted BCA of the bank was also affirmed.
ETI, a pan-African banking conglomerate, has operating presence in 33 countries.
Moody’s cited weaker sovereign creditworthiness, deteriorating macroeconomic environment and increasingly uncertain operating environment in Ghana and Nigeria, two of the major jurisdictions where ETI operates while assigning negative outlook on the long-term issuer and senior unsecured debt ratings of the bank.
The rating agency has recently downgraded the government issuer ratings of the two countries – to Ca from Caa2 for the Government of Ghana and to Caa1 from B3 for the Government of Nigeria – and lowered the respective Banking System Macro Profile scores to “Very Weak-” and to “Very Weak”.
‘’The negative outlook also captures the relatively modest foreign currency liquidity position of the holding company amid tight funding conditions globally, as well as the expected decline in dividends upstreamed by the Ghanaian subsidiary (amid lower profitability and a weaker local currency),’’ Moody’s said.
It noted however that the risk is partly mitigated by ETI’s track record of raising cross-border funding, the expected increase in dividends upstreamed by the subsidiaries operating in the Central African Economic and Monetary Community (following regulatory constraints during the pandemic) and in the West African Economic and Monetary Union (following phase-in of Basel II/III capital standards during 2018-23), as well as the group’s ability to temporarily upstream liquidity from its subsidiaries on a contingent basis.
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