November 17, 2021/Fitch Ratings

Fitch Ratings has assigned United Bank For Africa’s (UBA) USD1.5 billion global medium-term note programme (GMTN) final long- and short-term ratings of ‘B’.

Fitch has also assigned UBA’s USD300 million 6.75% senior unsecured notes (senior notes) due 2026, to be issued under the GMTN programme, a final rating of ‘B’ and a Recovery Rating (RR) of ‘RR4’.

The GMTN programme allows for borrowings for various tenors in the form of both senior unsecured and subordinated debt notes. The final programme ratings are in line with UBA’s Long- and Short-Term Issuer Default Ratings (IDR) of ‘B’, and apply only to senior unsecured notes issued under the programme.

In the case of subordinated debt issuance, the issue’s features will require further evaluation for the purpose of assigning a rating. There is no assurance that all notes issued under the programme will be rated or that all rated notes will be aligned with the programme rating.

The assignment of final ratings to both the GMTN programme and senior notes follows the receipt of final documents conforming to information already received by Fitch.

Key Rating Drivers

Senior Debt

The senior notes issued under its programme constitute direct, unconditional and unsecured and unsubordinated obligations of the bank and rank at least pari passu with all other outstanding unsecured and unsubordinated obligations of the bank.

The programme’s and senior unsecured debt ratings are in line with UBA’s Long- and Short-Term Foreign-Currency IDRs, reflecting Fitch’s view that the likelihood of default on senior unsecured notes issued under this programme is the same as the likelihood of UBA’s default. The senior unsecured debt’s ‘RR4’ reflects average recovery prospects upon the bank’s default.

The IDRs of UBA are driven by its standalone creditworthiness, as reflected in its ‘b’ Viability Rating (VR). The VR considers UBA’s exposure to the Nigerian volatile operating environment, but also the bank’s healthy profitability and adequate capitalisation, which provide reasonable capacity to absorb losses from an economic downturn (see ‘Fitch Affirms United Bank For Africa at ‘B’; Outlook Stable‘, dated 21 September 2021, for more details on the bank’s financial profile and rating drivers and sensitivities).

Rating Sensitivities

Factors that could, individually or collectively, lead to negative rating action/downgrade:

• The programme ratings would be downgraded if UBA’s IDRs are downgraded.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

• An upgrade of the programme ratings would come from an upgrade in UBA’s IDRs, which in turn, would require a sovereign upgrade and a strengthening of the bank’s capitalisation.

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance.

Public Ratings With Credit Linkage To Other Ratings

The debt ratings are linked to UBA’s IDRs.

Participation Status

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.