⚠️ S&P Warns: Ecobank Nigeria’s Default “Inevitable” Without Immediate Capital Boost
Global credit ratings agency, S&P, says the clock is ticking for Ecobank Nigeria—and survival depends on urgent parent company support.
In its latest report, S&P Global Ratings has placed Ecobank Nigeria under intense scrutiny, warning that its current “negative outlook” could only be revised to stable if specific emergency measures are taken within the next six months.
What’s Behind This Warning?
Ecobank Nigeria’s financial health has been weakened primarily by two factors:
1. A steep decline in its Capital Adequacy Ratio (CAR) — now around 7%, which is below the Central Bank of Nigeria’s 10% minimum requirement.
2. A sharp devaluation of the naira, which impacted its balance sheet, especially foreign currency-denominated exposures.
Without intervention, S&P forecasts a potential default within six months.
Lifeline Still Possible — If Parent Company Acts Fast
S&P noted that a $50 million capital injection from Ecobank Transnational Incorporated (ETI)—the bank’s parent—would help Ecobank Nigeria restore its CAR and avoid triggering a Eurobond default.
“If it receives the promised capital injection, it may no longer breach the minimum CAR, removing the risk of bond acceleration. Otherwise, a default appears inevitable,” the agency stated.
Due to these risks, S&P has downgraded Ecobank Nigeria’s stand-alone credit profile to ‘cc’ from ‘ccc’.
What Is the Bank Doing Now?
To ease pressure and improve liquidity, Ecobank Nigeria launched a tender offer to repurchase $150 million (half) of its $300 million Eurobond at par plus accrued interest, with an early tender premium of $12.50 per $1,000.
Settlement is expected on July 8, 2025.
In addition, the bank is asking bondholders to permanently remove the CAR covenant from the remaining bond notes. Those who agree early will receive an extra $2.50 per $1,000 principal. Notably, this covenant had previously been waived until September 30, 2025.
What Other Options Are on the Table?
S&P analysts expect the bank to consider further actions, such as:
• Issuing an additional $150 million in AT1 (Additional Tier 1) instruments
• Accelerating recovery of foreign exchange loans
• Tapping other capital-raising opportunities, despite the tough macroeconomic climate
However, they also warn that the unstable naira and investor caution may make these moves difficult.
⏳ The Outlook: 6 Months to Turn Things Around
The road ahead is clear—and narrow. To avoid default or a distressed debt exchange, Ecobank Nigeria must:
• Secure the full capital support from its parent
• Strengthen its capital base
• Successfully recover a portion of its FX loans
Failure to act quickly could trigger broader market implications, especially for investors exposed to the bank’s bonds or equity.
Global credit ratings agency, S&P, says the clock is ticking for Ecobank Nigeria—and survival depends on urgent parent company support.
In its latest report, S&P Global Ratings has placed Ecobank Nigeria under intense scrutiny, warning that its current “negative outlook” could only be revised to stable if specific emergency measures are taken within the next six months.
What’s Behind This Warning?
Ecobank Nigeria’s financial health has been weakened primarily by two factors:
1. A steep decline in its Capital Adequacy Ratio (CAR) — now around 7%, which is below the Central Bank of Nigeria’s 10% minimum requirement.
2. A sharp devaluation of the naira, which impacted its balance sheet, especially foreign currency-denominated exposures.
Without intervention, S&P forecasts a potential default within six months.
Lifeline Still Possible — If Parent Company Acts Fast
S&P noted that a $50 million capital injection from Ecobank Transnational Incorporated (ETI)—the bank’s parent—would help Ecobank Nigeria restore its CAR and avoid triggering a Eurobond default.
“If it receives the promised capital injection, it may no longer breach the minimum CAR, removing the risk of bond acceleration. Otherwise, a default appears inevitable,” the agency stated.
Due to these risks, S&P has downgraded Ecobank Nigeria’s stand-alone credit profile to ‘cc’ from ‘ccc’.
What Is the Bank Doing Now?
To ease pressure and improve liquidity, Ecobank Nigeria launched a tender offer to repurchase $150 million (half) of its $300 million Eurobond at par plus accrued interest, with an early tender premium of $12.50 per $1,000.
Settlement is expected on July 8, 2025.
In addition, the bank is asking bondholders to permanently remove the CAR covenant from the remaining bond notes. Those who agree early will receive an extra $2.50 per $1,000 principal. Notably, this covenant had previously been waived until September 30, 2025.
What Other Options Are on the Table?
S&P analysts expect the bank to consider further actions, such as:
• Issuing an additional $150 million in AT1 (Additional Tier 1) instruments
• Accelerating recovery of foreign exchange loans
• Tapping other capital-raising opportunities, despite the tough macroeconomic climate
However, they also warn that the unstable naira and investor caution may make these moves difficult.
⏳ The Outlook: 6 Months to Turn Things Around
The road ahead is clear—and narrow. To avoid default or a distressed debt exchange, Ecobank Nigeria must:
• Secure the full capital support from its parent
• Strengthen its capital base
• Successfully recover a portion of its FX loans
Failure to act quickly could trigger broader market implications, especially for investors exposed to the bank’s bonds or equity.