Fitch revises BoI outlook to negative
By Franklin Alli, with Agency Report
GLOBAL rating agency, Fitch, Wednesday, revised Bank of Industry’s (BOI) Outlook to Negative from Stable, due to the health of the country’s economy. Fitch, however, reaffirmed the bank’s National long-term rating at AA+, as well as its Long-Term Issuer Default Rating (IDR) at ‘B+’.
Reacting, Mr. Waheed Olagunju, Acting Managing Director of BoI, said the reaffirmation of the bank’s National Long Term rating by Fitch at ‘AA+(nga)’ is the most important thing for the development bank.
He stated: “It reaffirms that our bank is well managed and our books are good. However, because we are owned by government and Nigeria’s outlook was reviewed from stable to negative, therefore, it also affected the bank’s rating because we are government owned.”
Revision of Nigeria’s Outlook
“Because Nigeria’s outlook has been revised it follows that BoI, too was downgraded. There is nothing we can do about that because we are government owned, but on standalone, they reaffirmed our bank AA+. We also know that the downgrade of the country’s outlook was because of the recession.”
Fitch in its latest rating, said: “The revision of the development bank’s outlook to negative is premised on “The recent revision of Nigeria’s Outlook to Negative. BOI is a state-owned development bank and its IDRs are driven by its Support Rating Floor (SRF) of ‘B+’, which reflects a limited probability of sovereign support.
“The SRF factors in BOI’s 99.9 per cent state ownership, policy role and strategic importance to Nigeria’s economic and industrial development. It also reflects the authorities’ stronger ability to support BOI than for commercial banks, as BOI’s operations are almost entirely in local currency.
“BOI’s funding is long-term and almost exclusively sourced from the Central Bank of Nigeria (CBN). BOI’s Negative Outlook mirrors that on the sovereign rating. BOI’s National Ratings reflect the bank’s creditworthiness relative to the best credits in Nigeria. Fitch does not assign a Viability Rating to BOI as its business model is entirely dependent on the support of the state. “BOI’s IDRs, SR and SRF are sensitive to a weakening in the ability of Nigeria to support the bank, which would be indicated by a downgrade of Nigeria’s sovereign rating.
“The ratings could also be downgraded if Fitch’s view of the state’s willingness to support the bank changes adversely, for example in the event of a material change in the government ownership or a change in the bank’s policy role.
“BOI’s National Ratings are sensitive to a 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 IDR affirmed at ‘B+’, Outlook revised to Negative from Stable Short-Term IDR affirmed at ‘B’ National Long-Term Rating affirmed at ‘AA+(nga)’ National Short-Term Rating affirmed at ‘F1+(nga)’ Support Rating affirmed at ‘4’ Support Rating Floor affirmed at ‘B+,” said the statement.
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