Fitch Assigns Nigeria’s Proposed U.S Dollar Bond ‘B’ Rating
Fitch Ratings has assigned Nigeria’s proposed United States dollar bond, to be issued under its Global Medium Term Note Programme, a ‘B’ rating. Today, the Debt Management Office said Nigeria will hold global investors call on Friday ahead of its $3 Billion Eurobond issuance.
According to Fitch, the ‘B’ rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) assigned on 19 March 2021with a stable outlook.
“Nigeria has an environment, social and governance (ESG) relevance score of ‘5’ for both political stability and rights and rule of law, institutional and regulatory quality and control of corruption, as is the case for all sovereigns. These scores reflect the high weight that the World Bank governance indicators have in our proprietary sovereign rating model”, Fitch stated.
It added that the rating on the proposed bond is sensitive to any changes in the Long-Term Foreign-Currency IDR, which Fitch said is sensitive to public and external finance – individual or collectively.
On the sensitivity of the rating to public finances, Fitch stated that failure to address weaknesses in the fiscal policy framework, illustrated by a reinstatement of the fuel price subsidy or continued large central bank financing of the sovereign, particularly if it exceeds institutional safeguards.
Also noted is the nation’s external finances that Fitch said a significant intensification of external liquidity pressures, for example, illustrated by a rapid drawdown in reserves or renewed downturn in oil prices could trigger rating actions.
Meanwhile, it added that the same factors, individually or collectively, could lead to positive rating action/upgrade.
Fitch said stronger resilience of external finances from a durable recovery in international reserves or resumption of current account surpluses, and exchange-rate regime reform addressing Nigeria’s ongoing external vulnerability.
Also, it posited that a credible path to the stronger mobilisation of domestic non-oil revenues is sufficient to significantly lower the particularly high debt- and interest-to-revenue ratios.
Read Also: Fitch Affirms Nigeria at ‘B’ with Stable Outlook
How it added that a broad and sustainable improvement in the macroeconomic picture, with stronger economic growth supporting a recovery in the gross domestic product (GDP) per capita and a durable moderation in inflation towards the central bank’s target.
“Nigeria does not publish consolidated fiscal data on a general government basis, which complicates the assessment of fiscal performance”, Fitch said.
Fitch Assigns Nigeria’s Proposed U.S Dollar Bond ‘B’ Rating
