FITCH RATES BANK OF INDUSTRY AT ‘BB-‘; OUTLOOK NEGATIVE AND ‘AA+ (NGA)

FITCH RATES BANK OF INDUSTRY AT ‘BB-‘; OUTLOOK NEGATIVE AND ‘AA+ (NGA)

 

The headquarters of Fitch Ratings Ltd. stands in the Canary Wharf business and shopping district in London, U.K., on Friday, July 12, 2013. Recent data suggest Britain's economic recovery is gaining momentum after a return to growth in the first quarter. Photographer: Simon Dawson/Bloomberg via Getty Images

The headquarters of Fitch Ratings Ltd. stands in the Canary Wharf business and shopping district in London, U.K.,

Fitch Rates Bank of Industry at ‘BB-‘; Outlook Negative and ‘AA+ (nga) 

Fitch Ratings-London-25 June 2015: Fitch Ratings has assigned Nigeria-based Bank of Industry Limited (BOI) a Long-term Issuer Default Rating (IDR) of ‘BB-‘ with a Negative Outlook and a Short-term IDR of ‘B’. Fitch has also assigned BOI a National Long-term rating of ‘AA+(nga)’ and National Short-term rating of ‘F1+(nga)’.A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS
IDRS, SUPPORT RATING, SUPPORT RATING FLOOR AND NATIONAL RATINGS
BOI’s ratings are driven by and equalised with Nigeria’s sovereign ratings (BB-/Negative/B). They reflect Fitch’s view that if required, there is a moderate probability, that the Nigerian authorities would provide extraordinary support to BOI. The moderate probability of support is reflected in BOI’s Support Rating (SR) of ‘3’. The Negative Outlook on BOI’s Long-term IDRs reflects the Negative Outlook on the sovereign rating.

BOI’s Long-term IDR is at its Support Rating Floor (SRF) of ‘BB-‘, which considers Nigeria’s ability to provide such support in a timely manner as and when required, as indicated by Nigeria’s Long-term foreign currency IDR of ‘BB-‘. We also believe that its propensity to provide such support is high, reflecting its 99.9% ownership, BOI’s policy role and the bank’s strategic importance to economic and industrial development. BOI is also highly reliant on the Central Bank of Nigeria (CBN) for its funds.

The National Ratings reflect the bank’s creditworthiness relative to the best credits in Nigeria.

BOI was established in 2001 by the Nigerian government, and is 94.8% owned by the Ministry of Finance and 5.1% by CBN. BOI is Nigeria’s leading development finance institution with the sole mandate of financing local industries. We consider BOI a policy bank given its ownership and its key role in the state’s structural and economic reforms, particularly in developing the non-oil sector. The bank is majority funded by zero coupon, 25-year subordinated debt issued to CBN in 2013, which counts towards Tier 2 regulatory capital. Prior to that the bank was funded by a NGN100bn loan from the state (the Debt Management Office), which was converted to equity in favour of the Ministry of Finance.

The bank provides concessional financing to SMEs and larger corporates in specific industries in the form of direct loans and on-lending to commercial banks. This includes lending to start-ups, existing businesses and the rehabilitation of ailing businesses and industries. The bank has 14 offices across the country. BOI also acts as a fund manager for state governments, the federal government and legacy funds of high net worth individuals. Some of the funds are intervention funds aimed at supporting specific industries. BOI receives a fee for managing and advising the funds. BOI does not have a special charter and is a limited liability company regulated by CBN as a development finance institution.

RATING SENSITIVITIES
IDRS, SUPPORT RATING, SUPPORT RATING FLOOR AND NATIONAL RATINGS
BOI’s IDRs, SR and SRF could be sensitive to any weakening of the ability or willingness of Nigeria to support BOI, the former being reflected by Nigeria’s sovereign rating. The ratings could also be downgraded in the event of material change in the government ownership and/or any change in the bank’s policy role. An upgrade of the Nigerian sovereign would not necessarily lead to an upgrade of BOIs IDRs.

BOI’s National Ratings are sensitive to any change in Fitch’s opinion of BOI’s creditworthiness relative to the best credits in Nigeria

The rating actions are as follows:

Bank of Industry
Long-term foreign currency IDR assigned at ‘BB-‘/Outlook Negative
Short-term foreign currency IDR assigned at ‘B’
Support Rating assigned at ‘3’
Support Rating Floor assigned at ‘BB-‘
National Long-term Rating assigned at ‘AA+(nga)’
National Short-term Rating assigned at ‘F1+(nga)’

https://www.fitchratings.com/gws3.0/fitch-home/pressrelease?id=986955
Contact:
Primary Analyst
Mahin Dissanayake
Director
+44 20 3530 1618
Fitch Ratings Limited
30 North Colonnade
London, E14 5GN

Secondary Analyst
Andrew Parkinson
Associate Director
+44 20 3530 1420

Committee Chairperson
Claudia Nelson
Senior Director
+44 20 3530 1191

Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable Criteria
Global Bank Rating Criteria (pub. 20 Mar 2015)

Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM’. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Leave a Reply

Your email address will not be published. Required fields are marked *


*


Share This