Moody’s revises Ecobank’s outlook to stable, affirms ratings

Moody’s Investors Service has upgraded the outlook on Ecobank Transnational Incorporated’s (ETI) long-term issuer and senior unsecured debt ratings to stable from negative, citing the pan-African banking group’s resilient financial performance and improved liquidity profile.

In its latest rating note, Moody’s also affirmed ETI’s B3/Not Prime long- and short-term issuer ratings, B3 senior unsecured debt rating, b2 notional Baseline Credit Assessment (BCA), and b1 Adjusted BCA. ETI, which operates across 38 countries (including 35 in Africa), reported total assets of $28.9 billion as of March 2025.

According to the agency, the revision to a stable outlook reflects ETI’s stronger financial fundamentals, including higher dividends upstreamed to the holding company, which have reduced double leverage and lowered refinancing risks.

Recapitalisation of Ecobank Nigeria

The rating commentary noted that the ongoing recapitalisation of Ecobank Nigeria Limited is expected to be completed by the end of 2025 with minimal impact on the group’s overall financial position.

“The stable outlook also captures our expectation that a series of capital-boosting initiatives and actions to cure Ecobank Nigeria’s total capital position will be completed before the end of 2025,” Moody’s stated.

In May 2025, ETI secured shareholder approval to raise $250 million in Additional Tier 1 (AT1) capital. The transaction, which commenced on 9 July 2025, will see a portion of the proceeds downstreamed to Ecobank Nigeria as AT1 capital during Q3 2025. Ecobank Nigeria is also planning to raise $200 million in additional AT1 capital.

Moody’s analysts highlighted that Ecobank Nigeria’s recent successful offer to tender $150 million of its February 2026 $300 million notes, coupled with the removal of the capital adequacy ratio covenant, has reduced the risk of an event of default that could trigger cross-defaults at ETI.

Improved profitability and liquidity

The agency noted that ETI’s financial performance has shown notable resilience over the past year, with gradually improving profitability in 2024 and Q1 2025. This has resulted in a 22% increase in dividends paid to ETI in 2024, with 22 subsidiaries remitting dividends compared to 14 in 2021.

ETI’s double leverage ratio — which measures the holding company’s financial risk due to borrowing to invest in subsidiaries — has eased to 168% as of December 2024, down from 173% in 2023. Liquidity risks have also declined due to the refinancing of short-term liabilities with longer-term funding in 2024.

Moody’s pointed to ETI’s demonstrated market access, citing the successful issuance of $400 million in senior unsecured notes in October 2024 and a $125 million tap in May 2025, both maturing in October 2029.

Ratings affirmation

The affirmation of ETI’s B3 long-term issuer ratings reflects the stability of its b2 notional BCA and b1 adjusted BCA, supported by a one-notch uplift for affiliate support. Moody’s continues to assess a moderate probability that ETI’s major institutional shareholders would provide support if required.

The ratings agency also acknowledged improvements in the group’s asset quality over recent years, underlining ETI’s strengthened position within Africa’s banking sector.