Nigeria: S&P further downgrades Nigeria as oil crisis worsens

Nigerian economy19 September 2016, Lagos — The S&P Global Ratings downgraded Nigeria further into negative territory as the country struggles amid low oil prices and severe shortages of foreign-exchange.

The S&P lowered Nigeria’s rating one level to B, five levels below investment grade and in tandem with Kyrgyzstan and Angola, while the outlook was changed from negative to stable.

The S&P, in an email statement to Bloomberg, said: “Nigeria’s economy has weakened more than we expected owing to a marked contraction in oil production, a restrictive foreign exchange policy and delayed fiscal stimulus.”

While government debt remained low, “servicing costs as a percentage of government revenues are high and rising”, the agency added.

The downgrade was the latest blow to the economy, which shrank in the last two quarters and was headed for its first full-year recession since 1991, according to the International Monetary Fund (IMF).

The rating cut came as Nigeria prepared to issue its first Eurobond since 2013. The Debt Management Office asked banks wishing to manage a $1bn deal to place bids by September 19.

Nigeria Seeks Managers, the adviser for the $1bn of Eurobonds yields on the nation’s $500m of securities due in July 2023 have fell almost 280 basis points to 6.63 percent since peaking at 9.4 percent January 18. The bonds have returned 14 percent this year, compared with the average of 16 percent for sub-Saharan African sovereign dollar debt, according to Bloomberg indexes.

Moody’s Investors Service and Fitch Ratings Ltd. downgraded Nigeria to four levels below investment grade in the first half of the year.

 

  • Daily Trust
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