Moody’s upgrades Ecobank’s outlook to stable, citing stronger financial performance

Moody’s has upgraded the outlook on Ecobank Transnational Incorporated’s (ETI) long-term issuer and senior unsecured debt ratings from negative to stable.

In its latest commentary released on Thursday, the ratings agency reaffirmed the pan-African banking group’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 operates across 38 countries, including 35 in Africa, with total assets standing at $28.9 billion as of March 2025, according to details in the rating note.

Moody’s stated that the improved outlook reflects ETI’s sustained financial strength. The assessment also factors in the higher dividends being channelled to the holding company, which has lowered double leverage and reduced refinancing risks.

The revision further incorporates expectations that Ecobank Nigeria Limited’s recapitalisation will be completed by the close of 2025 without significantly affecting the group’s financial position. Moody’s noted that several capital-raising measures aimed at bolstering Ecobank Nigeria’s capital adequacy are on course to be finalised within the same period.

In May 2025, ETI secured shareholder approval to raise $250 million in Additional Tier 1 (AT1) capital and launched the transaction on 9 July 2025. Part of the proceeds will be allocated to Ecobank Nigeria during the third quarter of 2025 as AT1 capital. The Nigerian subsidiary’s separate plan to raise $200 million in AT1 capital was also recorded in the ratings note.

Moody’s pointed out that Ecobank Nigeria’s successful tender of $150 million from its February 2026 $300 million notes, along with the removal of the capital adequacy ratio covenant from the bond’s terms, has eased default concerns in Nigeria that could have triggered cross-default clauses at the ETI level.

Over the past year, ETI’s financial resilience has strengthened the rationale for the stable outlook. Liquidity risks are being curbed through gradually improving profitability across 2024 and the first quarter of 2025. Dividends sent upstream to ETI increased by 22 per cent in 2024, sourced from 22 dividend-paying subsidiaries, up from 14 in 2021.

Although still elevated, ETI’s double leverage ratio—measuring liquidity risk at the holding company level—improved to 168 per cent in December 2024 from 173 per cent the previous year. This was further supported by a refinancing of short-term liabilities with longer-term funding during 2024.

Moody’s highlighted ETI’s continued market access, underpinned by senior unsecured notes issuance of $400 million in October 2024 and an additional $125 million in May 2025, both maturing in October 2029.

The reaffirmation of ETI’s B3 long-term issuer rating mirrors the group’s b2 notional BCA and b1 Adjusted BCA, which include a one-notch uplift for affiliate support, indicating Moody’s assessment of a moderate likelihood that ETI’s major institutional shareholders would step in to provide support if necessary.

Moody’s also noted ongoing improvements in asset quality across the group.