Fitch Assigns 'B(EXP)' Rating to UBA's Senior Notes


Wednesday, May 24, 2017 11:44 AM / Fitch Ratings

Fitch Ratings has today assigned an expected rating of 'B(EXP)' to United Bank for Africa Plc's (UBA) proposed senior unsecured medium-term notes.

UBA plans to raise between USD350 million and USD500 million of fixed-rate five-year bonds. Based on Fitch's assessment on expected recoveries in a liquidation scenario, an expected Recovery Rating (RR) of 'RR4 (EXP)' is also assigned to the notes, implying average recovery prospects.

The notes will constitute senior unsecured obligations of UBA and will be used for general corporate purposes.

The assignment of the final rating is contingent on the receipt of final documents conforming to the information received to date.

Key Rating Drivers

The expected rating is in line with UBA's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B'.

In Fitch's view, the likelihood of default on these notes reflects the likelihood of default of the bank. According to Fitch's criteria, a bank's IDR usually expresses Fitch's opinion on the risk of default on senior obligations to third-party, non-government creditors as in Fitch's view these are typically the obligations whose non-performance would best reflect the uncured failure of the entity.

Where a bank has a Long-Term IDR of 'B+' or below, Fitch usually assigns an RR to the entity's issues. RRs provide greater transparency on the recoveries component of Fitch's assessment of the credit risk of low-rated issuer's securities.

Rating Sensitivities

A change in UBA's IDR would affect the rating of the notes and may also affect recovery prospects and the RR. UBA's IDRs are driven by the bank's standalone financial profile, as reflected in its Viability Rating (VR) of 'b'. UBA's VR and IDRs are primarily sensitive to further asset-quality deterioration and capital deterioration as well as continued pressure on foreign-currency funding and liquidity.

Related News

1.         Nigeria-Based United Bank for Africa PLC Proposed Senior Unsecured Notes Assigned 'B' Rating

2.        UBA to Launch Up To USD500 Million Senior Unsecured Medium Term Debt Notes

3.        Nigeria-Based United Bank For Africa PLC Assigned 'B and B' Ratings; Outlook Stable

4.        S&P assigns ‘B/B’ ratings and stable outlook on UBA Plc

5.        United Bank for Africa Plc Q1 2017 Results Underpin Outperform Rating

6.        UBA Plc – PBT and PAT Advanced by 41% and 62% Respectively in Q1 2017

7.        UBA Declares N23.89bn PAT in Q1 2017 Results,(SP:N5.50k)

8.       UBA Plc - Notice to Shareholders on AGM

9.        UBA Q4 2016 Results; Upgrades to Consensus Forecasts Likely

10.    UBA Grows Profit Before Tax By 32%, Declares Final Dividend per Share of 55kobo

11.     UBA Declares N72.26bn PAT in 2016 Audited Results,(SP:N5.39k)

12.    UBA Issues Notification of Closed Period and Dividend Consideration

13.    UBA Plc Scoops Awards in Five categories at the Global Banking Awards London

14.    FO Access Bank and Others Turn to the Bond Market

15.     UBA - Slight Better-Than-Expected Q3 2016 Results

16.    UBA Rated Outperform Records 16 PBT Growth YoY in Q3 2016 Results

17.     UBA Records Strong YTD Performance Shares Still Cheap

18.    UBA Half-Year Earnings Presentation The key takeaways


Related News