Fitch Rates Access Bank’s $300m Eurobond ‘B’


Obinna Chima

Fitch Ratings has assigned Access Bank Plc’s issue of $300 million 10.5% senior unsecured notes due 2021 a ‘B’ rating.

A statement from the global rating agency yesterday put the Recovery Rating of the foreign currency debt at ‘RR4’, which denotes average recovery prospects given default. The notes were issued under the bank’s $1 billion global medium term note (GMTN) programme.

Part of the new notes issued were pursuant to Access Bank’s exchange offer on its existing $350 million 7.25% of senior unsecured notes due 2017 issued by a special purpose vehicle, Access Finance BV.

At the same time, Fitch has assigned final long and short-term ratings of ‘B’ to the bank’s $1billion GMTN programme following a review of the final documentation.
The senior unsecured notes were rated in line with Access Bank’s Long-term Issuer Default Rating (IDR) of ‘B’.

In the agency’s view, the likelihood of default on these notes reflects the likelihood of default of the bank.

Furthermore, the statement said Access’ IDR was driven by both potential support from the Nigerian authorities, if required, and the bank’s standalone creditworthiness as defined by a Viability Rating (VR) of ‘b’.

“The rating on the senior unsecured notes is sensitive to a change in Access’ IDR, including a lower propensity and ability of the Nigerian sovereign to provide support, particularly in foreign currency. The IDR is sensitive to deterioration in the bank’s regulatory capital ratios, asset quality or liquidity.

“Like its peers, the bank’s financial metrics are under pressure from the current challenging operating conditions in Nigeria,” the statement added.

Fitch recently acknowledged that banks in the country had experienced a sharp rise in non-performing loans (NPLs), adding that other key concerns in the banking industry include forex scarcity, weakening capital adequacy ratios, and the sovereign’s ability to support banks, given its weaker financial flexibility. Fitch Ratings also warned of downgrades if NPLs continued to deteriorate.

“Some tolerance remains on NPL ratios for the banks’ Viability Ratings, which are all in the ‘b’ range. Other key concerns are tightening foreign currency (FC) liquidity, weakening capital adequacy ratios and the sovereign’s ability to support banks, given its weaker financial flexibility,” Fitch had stated about Nigerian banks generally.