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Agusto & Co. affirms the ‘Bbb+’ rating assigned to Union Bank of Nigeria Series 3 ₦30 billion Direct Bond

Rating Release

Agusto & Co. affirms the ‘Bbb+’ rating assigned to Union Bank of Nigeria Series 3 30 billion 10-year 16.2% Fixed Rate Direct Unsecured Subordinated Bond Issue under the 2018 Registered 100 billion Debt Issuance Programme

 The rating expires on 5 June 2021.

 Agusto & Co. hereby affirms the ‘Bbb+’ rating assigned to Union Bank of Nigeria Plc’s (“Union Bank” or “UBN” or “the Issuer”) ₦30 billion 10-year, 16.2% fixed rate, direct, unsecured and subordinated bond (“the Issue” or “the Bond”) being Series 3 of the ₦100 billion Debt Issuance Programme. The rating is a notch lower than the Issuer’s standalone ‘A-’ rating. The rating assigned to the Issuer reflects an adequate capitalisation, a good liquidity profile and a good refinancing capacity as evidenced by the oversubscribed bond issuances (Series 1, 2 and 3) within a year. Constraining the rating are lingering asset quality issues, subpar profitability compared to contemporaries and the impact of COVID-19 on the banking industry.

Prevailing macroeconomic headwinds triggered by the COVID-19 pandemic and the depressed global crude oil market are expected to adversely impact the banking industry. Owing to the vulnerabilities of Union Bank’s loan book and its earnings profile, a negative outlook has been assigned to the Bank’s rating and consequentially, the Issue’s rating. The outlook and rating will be monitored closely to reflect the evolving changes in the operating environment due to the pandemic.

This Rating Release is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating release may be used by you in full or in part without changing the meaning or context thereof but with due credit to Agusto & Co.