Fitch Downgrades Nigeria’s IDR To B+ | Independent Newspapers Limited
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Fitch Downgrades Nigeria’s IDR To B+

Posted: Jun 29, 2016 at 1:24 pm   /   by   /   comments (0)


Fitch Ratings last week downgraded Nigeria’s long-term foreign currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-’ as well as the country’s long-term local currency IDR to ‘BB-’ from ‘BB’. But the global rating agency assigned a stable outlook to the country. The issuer rating on Nigeria’s senior unsecured foreign-currency bonds was also downgraded to ‘B+’ from ‘BB-’.

Nigeria’s Country Ceiling was also revised downwards to ‘B+’ from ‘BB-’ and its Short-Term Foreign-Currency IDR affirmed at ‘B’.

The agency, with dual head offices in New York and London, pointed out that the downgrade of Nigeria’s IDRs, among others, was because its fiscal and external vulnerability had worsened due to a sharp fall in oil revenue and fiscal and monetary adjustments that were slow to take shape and insufficient to mitigate the impact of low global oil prices.

It hinged its decision to the renewed insurgency in the Niger Delta in the first half of 2016, which has lowered oil production, magnifying pressures on export revenues and limiting the inflow of hard currency.

Fitch also forecast that Nigeria’s general government fiscal deficit was expected to grow to 4.2 per cent in 2016, after averaging 1.5 per cent between 2011-2015, before beginning to narrow in 2017.

It noted that government has adopted a fiscal adjustment strategy centred on raising non-oil revenue and has made some progress in raising tax revenue by improving revenue collection and improving the control over revenue raised by government departments and state-owned enterprises.