Fitch downgrades Barclays Africa ratings
Credit rating agency, Fitch has downgraded its ratings of Barclays Africa Group Ltd and the South African bank Absa Group Ltd, following Barclays PLC’s decision to sell its 62.3 per cent stake in the Barclays Africa Group over the next 2 to 3 years.
The downgrade is due to Fitch’s view that Barclays PLC would have a lower propensity to support the Barclays Africa Group which also owns Absa, in the build up to the sale.
The agency said: “Fitch does not exclude the possibility of Barclays providing support to BAGL and/or Absa in case of need while it maintains a meaningful ownership share and management control. However, we consider BAGL and Absa to be of limited strategic importance to Barclays and are unable to fully rely on any potential institutional support from the parent for the subsidiaries’ ratings.”
“Consequently, we have downgraded BAGL and Absa to ‘BBB-‘, which reflects their respective financial strength and standalone creditworthiness, as defined by their Viability Ratings (VRs) of ‘bbb-‘.”
Barclays Africa Group’s Long-term foreign currency issuer default ratings from BBB to BBB- and its long-term local currency (IDR) issuer default ratings from BBB+ to BBB-. Its support rating was also downgraded from 2 to 4.
Absa bank’s long term foreign currency issuer default ratings was downgraded from BBB to BBB- and its long term local currency IDR from BBB+ to BBB-. Absa’s support rating was downloaded from 2 to 3 as well.
Below are the full rating actions on Barclays Africa Group Limited:
Long-term foreign currency IDR downgraded to ‘BBB-‘ from ‘BBB’; Outlook Stable
Long-term local currency IDR downgraded to ‘BBB-‘ from ‘BBB+’; Outlook Stable
Short-term foreign currency IDR affirmed at ‘F3’
Viability Rating unaffected at ‘bbb-‘
Support Rating downgraded to ‘4’ from ‘2’
National Long-term Rating downgraded to ‘AA(zaf)’ from ‘AAA (zaf)’; Outlook Stable
National Short-term Rating affirmed at ‘F1+(zaf)’;
Senior unsecured debt: downgraded to ‘AA (zaf)’ from ‘AAA (zaf)’ and affirmed at ‘F1+(zaf)’
Subordinated notes: downgraded to ‘AA-(zaf)’ from ‘AA+(zaf)’
The rating actions on Absa Bank Ltd are as follows:
Long-term foreign currency IDR downgraded to ‘BBB-‘ from ‘BBB’; Outlook Stable
Long-term local currency IDR downgraded to ‘BBB-‘ from ‘BBB+’; Outlook Stable
Short-term foreign currency IDR affirmed at ‘F3’
Viability Rating unaffected at ‘bbb-‘
Support Rating downgraded to ‘3’ from ‘2’
Support Rating Floor assigned at ‘BB-‘
National Long-term Rating downgraded to ‘AA(zaf)’ from ‘AAA (zaf)’; Outlook Stable
National Short-term Rating affirmed at ‘F1+(zaf)’
Senior unsecured debt: downgraded to ‘BBB-‘ from ‘BBB’, ‘AA (zaf)’ from ‘AAA (zaf)’ and affirmed at ‘F3’
By Emmanuel Odonkor