03 December 2021 — Moody’s Investors Service has today changed the ECOWAS (Economic Community of West African States) Bank for Investment and Development’s (EBID) outlook to stable from negative and affirmed the B2 long-term issuer rating.<\/p>\n
The change in outlook to stable acknowledges EBID’s recent clearance of arrears on capital from a number of major shareholders, continuing efforts to improve its liquidity framework and risk management practices, and an expansion in funding sources which helps reduce EBID’s dependence on a narrow range of trade finance providers. The stable outlook also reflects the recent orientation of EBID’s business model towards increased on-lending activities. Moody’s also assumes that EBID will significantly slow its loan book expansion plans given limited near-term prospects for raising further significant capital to contain rising leverage.<\/p>\n
The B2 rating affirmation balances these modest improvements in a number of key credit characteristics against persistent credit challenges, including a still-weak liquidity profile from concentrated albeit gradually improving financing sources, limited historical support from lowly rated shareholders notwithstanding recent repayments of capital arrears, weak capital adequacy given the bank’s low borrower quality and challenging area of operations, and governance constraints.<\/p>\n