Moody’s affirms Nigeria’s Ba3 government issuer rating with stable outlook

Rating agency, Moody’s says it has affirmed the Nigerian government’s Ba3 issuer rating with a stable outlook.

According to Moody’s the raring is based on three factors. They are, the strength of the federal government balance sheet, despite budgetary pressures stemming from the current low oil price environment; Nigeria’s robust medium-term real GDP growth prospects, despite the current economic slowdown; and the fact that the successful democratic presidential elections provide an opportunity for the country to improve institutional strength and governance.

In a related move however, Moody’s says it has lowered Nigeria’s foreign currency ceiling for bonds to Ba2 from Ba1, which reflects a somewhat higher risk that the government would impose a moratorium on other external borrowers in the event of its own severe financial distress.

“While overall Nigeria’s external vulnerability remains relatively low, the lowering of the foreign currency bond ceiling takes into account the recent restrictions imposed by the monetary authorities to conserve the central bank’s foreign exchange reserves. Additionally, Nigeria’s local currency bond and bank deposit ceilings remain at Baa3, and the foreign-currency ceiling for bank deposits is unchanged at B1,” Moody’s notes.

By Emmanuel K. Dogbevi