Fitch Rates BOAD's Debut Euronotes 'BBB'
OREANDA-NEWS. Fitch Ratings has assigned Banque Ouest Africaine de Developpement's (BOAD; BBB/Stable/F2) debut Euronotes a 'BBB' rating, subject to the receipt of final documentation.
The US dollar-denominated notes are unsecured unsubordinated obligations of BOAD, and are rated in line with its 'BBB' Long-term Issuer Default Rating (IDR). The net proceeds will be used for general corporate purposes and project financing.
KEY RATING DRIVERS
BOAD's ratings are primarily based on the strong support the bank receives from its largest shareholder, the Banque Centrale des Etats d'Afrique de l'Ouest (BCEAO), which is the regional central bank for the West African Economic and Monetary Union (Union Economique et Monetaire Ouest-Africaine - UEMOA) and owns 47% of BOAD's capital. The ratings also encapsulate support from the eight regional member states (RMS) of the UEMOA, which each own 6% of BOAD's capital, as well as from its non-regional member states, especially France (AA/Stable; 4% of capital).
BOAD's ratings are driven by shareholder support. An upgrade could follow a significant improvement in the credit quality of UEMOA's countries, leading to an improvement in BCEAO's capacity to support the bank.
While a reduction in the rating of individual RMS would not have a direct impact given their fairly low share in BOAD's capital, a downgrade of the Country Ceiling for UEMOA would lead to a similar action on BOAD's ratings.
A devaluation of the CFA franc against the euro or a change in the monetary agreements between France and UEMOA, implying a lower level of support by France to the region, would lead to a downgrade of BOAD's ratings.
The ratings and Outlooks are sensitive to a number of assumptions. In particular, Fitch assumes that the average sovereign rating of the seven non-publicly rated countries of the UEMOA is low speculative-grade. It also assumes that the French treasury will honour its commitment to provide liquidity to BCEAO and preserve the convertibility of the CFA franc into euro in the event of a depletion of its international assets.