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Stock & Analyst Updates | |
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Friday,
December 15, 2017 /01:10PM / Fitch Ratings
Fitch
Ratings has placed First Bank of Nigeria's (FBN) subordinated notes, which are
rated 'CCC'/'RR5', on Rating Watch Positive (RWP). The notes were issued
through FBN Finance Company BV, a special purpose vehicle, which was
established to provide funding for the bank. FBN's other ratings are unaffected
by this rating action.
The
rating action follows publication of an exposure draft (Exposure Draft: Global
Bank Rating Criteria) on 12 December 2017. The exposure draft includes a
proposal to append '+' or '-' modifiers to 'CCC' Long-Term Issuer Default
Ratings (and long-term debt ratings) to denote relative status/creditworthiness
within this rating level.
Key Rating Drivers
The
subordinated debt of FBN is rated one notch below FBN's 'b-' Viability Rating
(VR). If modifiers are introduced to the 'CCC' IDR category as proposed, the
one notch differential would be maintained and FBN's subordinated debt would be
rated 'CCC+'.
The
notching from the VR reflects higher-than-average loss severity for subordinated
debt relative to senior debt. No additional notches for non-performance risk
have been applied.
Rating Sensitivities
The
ratings on the subordinated notes are sensitive to a change in FBN's VR.
Fitch
expects to resolve the RWP within the next six months upon the conclusion of
the Exposure Draft period.
If
the final criteria are substantially similar to the Exposure Draft, then the
rating on the subordinated notes is likely to be upgraded to 'CCC+' after the
final criteria are published.
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