Fitch affirms Ecobank Nigeria’s long-term IDR at ‘CCC’

Fitch Ratings has affirmed Ecobank Nigeria’s (ENG) Long-Term Issuer Default Rating (IDR) at ‘CCC’, indicating that while the bank faces ongoing challenges, it maintains sufficient liquidity to meet its near-term obligations—including the $150 million Eurobond due in February 2026.

In its latest rating commentary published on its website, Fitch also downgraded ENG’s Viability Rating (VR) to ‘f’ from ‘ccc’, citing ongoing regulatory and financial pressure. Despite this, the rating agency emphasized that the risk of default has not materially increased, hence the maintained IDR.

Eurobond Restructuring Eases Pressure

Fitch highlighted ENG’s recent tender offer to repurchase $150 million of its $300 million Eurobond at a slight premium. As part of the agreement, bondholders consented to the removal of a covenant linked to capital adequacy ratio (CAR) breaches. This strategic move helped the bank avoid a potential accelerated repayment, alleviating short-term pressure on its liquidity position.

“The affirmation of the Long-Term IDR despite the VR and SSR downgrades reflects Fitch’s view that default risk has not materially increased,” the agency noted.

Liquidity Still a Key Strength

According to Fitch, ENG retains enough internal liquidity to repay the remaining $150 million Eurobond due in early 2026. The report also acknowledged the possibility of additional support from its parent company, Ecobank Transnational Incorporated (ETI), if required.

However, the agency flagged weak foreign currency liquidity, citing a high share of term deposits in foreign currency, which are generally considered less stable.

Outlook and Possible Upgrade Triggers

Fitch identified the following conditions for a potential ratings upgrade:

• Viability Rating Upgrade: This would require restoration of CAR compliance and exit from regulatory forbearance—only achievable through a significant capital injection from external sources and a marked reduction in credit concentrations and problem loans.

• IDR Upgrade: Would depend on improvements in either the VR or Shareholder Support Rating (SSR) to ‘ccc+’ or higher.

• National Rating Upgrade: Would need ENG’s credit profile to strengthen relative to other Nigerian financial institutions.

Summary: While Fitch’s downgrade of Ecobank Nigeria’s VR signals underlying financial strain, the bank’s liquidity profile and recent bond restructuring offer a measure of stability. Market watchers will be keeping an eye on whether the bank can restore capital adequacy compliance and attract new investment.