Leading rating organisation, Fitch Ratings, has revised the stable Long-Term Issuer Default Rating (IDR) of Bank of Industry Limited (BOI), to Negative.

The rating firm also affirmed its IDRs at ‘B+’.

The review is based on the revision of Nigeria’s Long-Term IDR to Negative from stable on 19 December 2019.

Fitch Ratings expects the bank’s credit profile to be negatively affected in the event of a sovereign downgrade, particularly if this is accompanied by sharp Naira devaluation.

In this event, the assessment is that capital and potentially, asset-quality metrics would be negatively impacted.

BOI is a state-owned development bank and its Long-Term IDR is equalised with the Nigerian sovereign rating and driven by its Support Rating Floor (SRF) of ‘B+’, which reflects a limited probability of support from the state if required.

The Negative Outlook on BOI mirrors that on the Nigerian sovereign, as it is 99.9% state owned, and has strategic importance to Nigeria’s economic and industrial development.

Rating Sensitivities

The Negative Outlook on BOI reflects views that a sovereign downgrade would likely be accompanied by a downgrade of these issuers’ Long-Term IDRs.

BOI’s IDR, Support Rating and SRF are sensitive to changes in Nigeria’s sovereign ratings.

The bank’s rating are also sensitive to a reduced propensity of the authorities to support the bank.

The National Ratings are sensitive to a change in Fitch’s opinion of the banks’ creditworthiness relative to other issuers in Nigeria.