GCR Upgrades Stanbic IBTC Bank Plc's SNP2 N30bn Series 1 Senior Unsecured Notes; Stable Outlook

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Wednesday, June 30, 2021 / 06:32 PM / By GCR Ratings / Header Image Credit: Stanbic IBTC

 

GCR Ratings ("GCR") has upgraded the national scale long term credit ratings accorded to Stanbic IBTC Bank PLC's Structured Note Programme ("SNP") 2 Series 1 Senior Unsecured Notes to AA+(NG) from AA(NG), with a Stable Outlook.


Issue

Rating class

Rating scale

Rating

Outlook

N30bn Series 1 Senior Unsecured

Long term issue

National

AA+(NG)

Stable

 

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Rating Rationale

Stanbic IBTC Bank PLC's ("Stanbic IBTC" or "the Issuer") national scale long term Issuer rating was recently upgraded to AA+(NG) from AA(NG), underpinned by its sustained adequate capitalisation and sound asset quality amidst the strains in the operating environment. Given the status of the N30bn Series 1 Notes as senior unsecured, the accorded long term issue rating has been upgraded to AA+(NG) from AA(NG), reflective of the one-notch upgrade in the Issuer's rating.


Stanbic IBTC's SNP 2 Series 1 senior unsecured Notes of N30bn was issued in December 2018 under the N150bn SNP. Particularly, the SNPs Trust Deeds permit the Issuer to exercise its discretion in determining the number of issues, as well as the forms, terms and conditions of the Notes to be issued under the SNPs. Accordingly, the SNP Notes constitute direct, senior unsecured obligations of the Issuer. The Series 1 Notes constitute senior, direct, irrevocable, and unsubordinated obligations of the Issuer, and shall rank pari passu without any preference among themselves and all unsecured and unsubordinated indebtedness and monetary obligations of the Issuer, present and future, but in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights.


Being senior unsecured debt, the Notes bear the same probability of default as the Issuer and would reflect similar recovery prospects to senior unsecured creditors in the event of a default.


According to the period performance reports provided to GCR by the Trustees to the Noteholders, dated 18 June 2021, the Issuer has been meeting all its obligations under the Note issues on a timely basis so far, with total coupon payment till date amounting to N11.8bn.

Outlook Statement

The stable outlook reflects GCR's expectation that Stanbic IBTC's financial profile would remain resilient despite the strains in the operating environment. We anticipate a strong GCR core capital ratio, underpinned by solid internal capital generation and adequate loan loss reserving. Credit losses and NPL ratio are expected to be sustained at strong range, albeit with the loan book concentration by obligor and FCY anticipated to remain high. We also factored in adequate liquidity on account of the highly liquid balance sheet.

Rating Triggers

The accorded ratings would be sensitive to a positive rating action on the Issuer. Non-compliance with the set covenants or a downgrade in the Issuer's rating could trigger a negative rating action.


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