BY EMMANUEL OLUKOTUN

Ecobank Nigeria’s long-term issuer credit rating has been downgraded to ‘CCC-’ from ‘CCC’, with the outlook placed at negative by S&P Global Ratings.

This is as a result of the $150 million bond buyback offer on the bank’s $300 million Senior Unsecured Eurobond.

Part of the tender offer made by Ecobank includes an early tender premium of $12.50 for every $1,000 in principal (equivalent to 1.25%), with the anticipated settlement date set for July 8, 2025. The offer also requests bondholders’ consent to eliminate the capital adequacy covenant on the outstanding notes.

These, made S&P to downgrade the $300 million Eorobond from ‘CCC’ to ‘CCC-, even though S&P explained that it does not view the tender offer as distressed debt restructuring.

The assessment may eventually change however, if the parent organization, Ecobank Transnational Incorporated (ETI), makes available more capital to the bank as promised.

After the naira devaluation, the bank could not meet the Central Bank’s Capital Adequacy Ratio (CAR), requirement, which dropped to 7%.

The breach of the CAR caused the bank to seek the consent of its bondholders to pause the capital adequacy notes on the Eurobond notes till September 2025.

As a result, Ecobank got a N50 billion repayment on promissory notes from ETI, this, has however, not been enough to restore the bank’s CAR.

According to S&P, the bank is expected to receive another $50 million capital injection from its parent group before August 2025. However, the ratings agency notes that if the bank is unable to receive this capital injection, it will inevitably default on its bonds. A situation that would cause a further downgrade to ‘CC’.

Ecobank has been advised to raise $150 million via Tier 1 instruments to beef up its liquidity and do more in recovering its foreign currency-denominated loans.