S&P Global Ratings has flagged that its “negative” outlook on Ecobank Nigeria could be upgraded to stable.
It was noted that the revision was if the bank successfully implements emergency capital measures or recovers substantial FX‑denominated loans within the next six months.
The rating agency highlighted that a prompt capital injection from Ecobank Transnational Incorporated (ETI) would help the Nigerian subsidiary meet the minimum Capital Adequacy Ratio (CAR) and mitigate the risk of Eurobond acceleration. Absent this, S&P said it sees a default within six months as “inevitable”.
“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 a default appears inevitable. Therefore, we revised Ecobank Nigeria’s stand-alone credit profile (SACP) to ‘cc’ from ‘ccc’,” the report stated.
Recall that Ecobank Nigeria launched a tender offer to repurchase $150 million, half of its outstanding $300 million senior unsecured Eurobond, at par plus accrued interest. An early‑tender premium of $12.50 per $1,000 (1.25 per cent) is on offer, with settlement expected on July 8, 2025.
Additionally, the bank is seeking bondholder approval to remove the capital adequacy covenant from the remaining notes permanently. Noteholders agreeing early will receive $2.50 per $1,000 principal. The covenant was previously waived until September 30, 2025.
Additional capital measures and risk of distress
In addition to the expected $50 million capital injection from Ecobank Transnational Incorporated, S&P analysts expect Ecobank Nigeria to follow up with further capital-boosting measures. In their report, they identified issuing another $150 million in Additional Tier 1 (AT1) instruments to restore its CAR. However, they warned that the uncertain economic environment, including pressure on the naira, could make such actions more challenging.
Market insights echo the concern that with the naira having devalued sharply, the bank’s CAR dipped to approximately 7 per cent by June 2024, below the Central Bank’s 10 per cent minimum. An initial $50 million capital inflow and early FX loan repayments from its parent have improved liquidity, but remain insufficient.
Unless Ecobank Nigeria can secure the promised capital, strengthen its CAR, or recover FX loans over the next six months, the likelihood of a default or distressed exchange remains high, S&P cautioned.