Following the country’s sovereign downgrade, Fitch Rating downgraded six commercial banks’ long-term issuer default ratings (IDRs) to ‘B-’ in November 2022 due to the high sovereign exposure. In a recent report, the group retained the long-term issuer default rating of B- for Zenith Bank and UBA plc with a stable outlook while GTCO and Access Bank have a long-term issuer default rating (IDR) of ‘B’ with a stable outlook. For the national long-term rating, Zenith Bank was assigned AA- (nga), UBA has A+ (nga), GTCO has AA (nga) and Access Bank has A+ (nga).
The negative VR of Zenith Bank and UBA Plc is still linked to the high sovereign exposure relative to capital and the high concentration in Nigeria while GTCO & Access bank’s strong capital buffers & diversification provided good loss absorption capacity to improve the VRs to a notch below b+, as stated in the report. Analysts, however, noticed the report omitted Nigerian banks’ exposure to Ghana’s debt default. The Eurobond exposure summed up to $1.7bn according to Agusto and affected banks have made provisions by raising impairment charges which weighed on profit in 2022. The credit rating is expected to reflect the banks’ exposure and sensitivity to Ghana’s operating environment.
Oil Prices Head for A Second Week of Losses Amid Growing Demand Concerns
Oil prices appeared poised for their second consecutive weekly decline as concerns about demand and skepticism regarding a potential nuclear deal between the United States and Iran continued to drive prices lower on Friday. The decline in prices persisted as both benchmarks experienced a decrease of about US$1 on Thursday. This slight rebound followed a larger earlier loss of over US$3 when the Middle East Eye reported that a nuclear deal was imminent, which was subsequently denied by both the U.S. and Iran. Consequently, the week is likely to conclude with oil price benchmarks showing losses of around 1%, mirroring the previous week’s decline. Analysts expect oil prices to remain within a similar range in the upcoming week due to worries about demand in the United States and China. Domestically, analysts expect petrol prices to largely surpass N500 per litre as marketers face the reality of the new ex-depot prices.