Fitch Ratings has affirmed Ecobank Nigeria’s (ENG) Long-Term Issuer Default Rating (IDR) at ‘CCC’, stating that despite this rating, the bank has sufficient liquidity to continue meeting its obligations, including the outstanding USD150 million Eurobond due in February 2026.
The agency also downgraded Ecobank Nigeria’s Viability Rating (VR) to ‘f’ from ‘ccc’.
According to a statement released by Fitch on Tuesday, it has also downgraded the bank’s Viability Rating (VR) to ‘f’ from ‘ccc’ and Shareholder Support Rating (SSR) to ‘no support’ from ‘ccc’.
Fitch highlighted that Ecobank Nigeria recently completed a tender offer to repurchase USD150 millions of its USD300 million Eurobond at a slight premium. As part of the transaction, bondholders agreed to remove a covenant tied to a capital adequacy ratio (CAR) breach. This move helped the bank avoid the risk of accelerated repayment of the Eurobond.
Fitch further noted that ENG retains sufficient internal liquidity to repay the remaining USD150 million due in February 2026 and may receive additional liquidity support from its parent group. However, foreign currency liquidity remains weak by domestic standards, mainly due to the high proportion of less stable term deposits in foreign currency.
The agency stated, “The downgrade of the VR reflects Fitch’s view that the bank has suffered a material capital shortfall, with its total capital adequacy ratio (CAR) being in breach of the 10% regulatory requirement since February 2M24 despite extensive regulatory forbearance. Fitch believes ENG will need to strengthen capitalisation through extraordinary capital support or will need to continue operating with regulatory forbearance regarding its material capital shortfall due to its weak profitability and extremely high credit concentrations and problem loans. This constitutes a bank failure under Fitch’s Bank Rating Criteria.
“The downgrade of the SSR reflects Fitch’s view that the delay in Togo-based Ecobank Transnational Incorporated (ETI; B-/Stable) providing a substantial capital injection is indicative of a weak record of timely capital support and that there is no reasonable assumption of liquidity support being forthcoming to avoid defaulting on all senior obligations.
“The affirmation of the Long-Term IDR despite the VR and SSR downgrades reflects Fitch’s view that default risk has not materially increased,” Fitch noted.
The downgrade of the National Long-Term Rating reflects our view that, as a result of the VR and SSR downgrades, ENG’s creditworthiness relative to other Nigerian issuers has weakened.
Default of Ecobank’s long-term IDR remains real possibility
According to Fitch Ratings, the Long-Term Issuer Default Rating (IDR) reflects its assessment that default remains a genuine risk for Ecobank Nigeria, primarily due to a significant capital shortfall and the potential for deposit withdrawals amid the bank’s limited foreign-currency liquidity.
Despite these concerns, Fitch maintains that the bank currently possesses adequate liquidity to meet its financial obligations, including the outstanding USD150 million Eurobond maturing in February 2026.
The Viability Rating (VR) of ‘f’ reflects the severity of the bank’s capital inadequacy. This rating is lower than the implied ‘ccc-’ level, following a negative adjustment for weak capitalisation and leverage.
Ecobank recently concluded a tender offer to buy back $150 million of its$300 million Eurobond at a small premium.
“As part of the offer, bondholders agreed to remove a covenant referencing a CAR breach and therefore ENG has avoided a potential acceleration of the Eurobond. ENG has sufficient internal liquidity to repay the remaining $150 million maturing in February 2026 and may benefit from some liquidity support from the group. Nevertheless, foreign-currency liquidity is weak by domestic standards, particularly as a high percentage of foreign-currency deposits are less stable term deposits,” Fitch stated.
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Fitch further observed that Ecobank Nigeria has remained in breach of the 10% minimum capital adequacy ratio (CAR) requirement since the naira’s devaluation in February 2024, despite benefiting from significant regulatory forbearance.
The rating agency noted that Ecobank Nigeria has made minimal progress in restoring compliance with the capital adequacy ratio (CAR), and the shortfall is especially significant when the effects of regulatory forbearance are excluded.
Fitch therefore believes the bank faces a substantial capital deficit and is unlikely to regain compliance or exit forbearance without a major capital injection, given its high level of problem loans and weak profitability.
