Ecobank Nigeria has initiated a bondholder consent solicitation following a downgrade by S&P Global Ratings, which lowered the bank’s long-term issuer credit rating from ‘CCC’ to ‘CCC-’.
The downgrade reflects heightened concerns over the bank’s capital adequacy position and its recent $150 million bond buyback offer on a $300 million Senior Unsecured Eurobond.
As part of the tender offer, Ecobank Nigeria proposed an early tender premium of $12.50 for every $1,000 in principal, equivalent to 1.25%, with the anticipated settlement date scheduled for July 8, 2025.
The bank is also seeking bondholder approval to remove the capital adequacy covenant on the remaining outstanding notes.
S&P simultaneously downgraded the $300 million Eurobond to ‘CCC-’, citing increased pressure on the bank’s credit profile. While the agency clarified that the current buyback does not yet qualify as a distressed debt restructuring, it warned that this assessment could change if the bank fails to secure the promised capital support from its parent company, Ecobank Transnational Incorporated (ETI).
The downgrade follows Ecobank Nigeria’s breach of the regulatory Capital Adequacy Ratio (CAR), which fell to 7%, below the 10% minimum required by the Central Bank of Nigeria (CBN). The devaluation of the naira significantly impacted the bank’s balance sheet and foreign currency exposures, prompting urgent measures to stabilize its financial position.
In response, the bank received a $50 million prepayment on promissory notes and early repayments on certain foreign currency loans from its parent, ETI. However, these inflows have been insufficient to restore the CAR to regulatory levels.
S&P noted that Ecobank Nigeria is expected to receive an additional $50 million capital injection before August 2025. Failure to meet this timeline may result in further deterioration of the bank’s solvency outlook, with a potential rating downgrade to ‘CC’, which would indicate a heightened likelihood of default.
The bank has been advised to explore additional Tier-1 capital instruments to raise up to $150 million and improve its liquidity buffers. It is also under pressure to recover outstanding foreign currency-denominated loans to reduce balance sheet vulnerabilities.
Ecobank Nigeria’s request to amend bond covenants and the ongoing capital support from ETI are seen as critical to maintaining operational stability. However, analysts warn that continued delays or an incomplete recapitalisation may trigger additional rating action and weigh on investor confidence.
The situation underscores the broader challenges facing Nigerian banks operating in a volatile macroeconomic environment, with elevated interest rates, inflationary pressures, and currency instability.
