Moody’s Assigns Provisional (P)B2 Rating to Access Bank
By Modupe Gbadeyanka
The proposed issuance of up to N15 billion ($41.2 million) five-year senior unsecured notes of Access Bank Plc have been assigned provisional ratings of (P)B2 by Moody’s Investors Service.
In a statement obtained by Business Post, Moody’s noted that it issued provisional ratings in advance of the final sale of securities.
Upon a conclusive review of the transaction and associated documentation, Moody’s said it will endeavour to assign definitive ratings to the securities, which may differ from provisional ratings.
Explaining, the rating agency said the (P)B2 long-term local currency senior unsecured rating assigned to the senior unsecured notes was aligned with Access Bank’s B2 local currency deposit rating and issuer ratings, reflecting that the debt securities will be unsecured and unsubordinated obligations of the Nigerian lender and will rank at least equally with all other senior unsecured and unsubordinated obligations of the bank at all times.
The statement said Access Bank’s ratings reflect its strong asset quality metrics and relatively robust loan underwriting standards and risk management processes, large local currency liquidity buffers, and resilient capital buffers.
“These strengths are balanced against Nigeria’s still challenging operating environment which negatively affects banks’ asset quality and revenue growth, and concentration risks in the bank’s loan book, including its exposure to loans denominated in foreign currencies,” Moody’s said.
However, it stressed that given the alignment described above, the senior unsecured ratings will reflect any rating actions taken on Access Bank’s deposit and issuer ratings.
Currently, Nigeria’s issuer rating of B2 acts as a constraint to Access Bank’s local currency deposit rating and issuer ratings, given the bank’s high sovereign exposure.
“Any upgrade of the bank’s ratings needs to be preceded by a sovereign rating upgrade while the bank maintains its strong financial metrics.
Access Bank’s ratings could be downgraded if its asset quality deteriorates meaningfully, putting pressure on the bank’s profitability and capital buffers.
“A substantial deterioration of the bank’s liquidity buffers would also likely trigger a downgrade, as would a downgrade of the sovereign itself,” the rating firm noted.