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S&P upgrades Nigeria-based Diamond Bank after merger announcement

S&P Global Ratings on Dec. 28 upgraded Diamond Bank PLC's national scale long-term issuer credit rating to ngBB from ngBB- and affirmed the short-term rating at ngB, after it signed an agreement to merge with Nigerian peer Access Bank PLC.

Additionally, the rating agency revised the outlook on the bank's issuer credit rating to stable from negative. The bank's long- and short-term issuer credit ratings were affirmed at CCC+/C and the senior unsecured debt was affirmed at CCC+.

S&P noted that Diamond bank is in the middle of the sale of its British unit. The rating agency also believes that the recent approval by Nigerian central bank for the bank to change to a national banking license with minimum capital adequacy ratio of 10% has lessened pressure on the bank's regulatory capital. These factors have resulted in the Nigerian bank's upgrade and change of outlook.

The change of Diamond Bank's outlook also reflects S&P's view that the bank will be able to repay its $200 million eurobond in May 2019.

At the same time, the rating agency affirmed Access Bank's long- and short-term issuer credit ratings at B, and the outlook remains stable. The bank's Nigeria national scale long- and short-term ratings were affirmed at ngA/ngA-1, while the senior unsecured debt was affirmed at B.
Access Bank's stable outlook reflects that the deal is expected to increase the bank's earnings capacity during the next 12 months.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found in the sources section.