Moody’s Investors Service (Moody’s) has assigned provisional ratings of (P)B2 to Access Bank Plc’s (Access) proposed issuance of up to N15 billion five-year senior unsecured notes.
Moody’s issues provisional ratings in advance of the final sale of securities. These ratings, however, represent Moody’s preliminary credit opinions only. Upon a conclusive review of the transaction and associated documentation, Moody’s will endeavor to assign definitive ratings to the securities. Definitive ratings may differ from provisional ratings.
The (P)B2 long-term local currency senior unsecured rating assigned to the senior unsecured notes is aligned with Access’ B2 local currency deposit rating and issuer ratings, reflecting that the debt securities will be unsecured and unsubordinated obligations of Access and will rank at least equally with all other senior unsecured and unsubordinated obligations of the bank at all times.
According to Moody’s, “Access’ ratings reflect the bank’s 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.”
Given the alignment described above, the senior unsecured ratings will reflect any rating actions taken on Access’ deposit and issuer ratings.
Currently, Nigeria’s issuer rating of B2 acts as a constraint to Access’ 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’ 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.