SAT, DEC 09 2023-theGBJournal|Moody’s Investors Service on Friday changed Nigeria’s outlook to positive from stable, ”reflecting the possible reversal of the deterioration in Nigeria’s fiscal and external position as a result of the authorities’ reform efforts.”
The Ratings agency also affirmed Nigeria’s long-term foreign currency and local currency issuer ratings, and foreign currency senior unsecured debt ratings at Caa1. It also affirmed Nigeria’s foreign currency senior unsecured MTN program rating at (P)Caa1.
The affirmation at Caa1 reflects the still very weak credit profile of the country.
Moody’s first downgraded Nigeria’s long-term foreign currency and local currency issuer ratings, and foreign currency senior unsecured debt ratings on 27 January, 2023 from B3, on the expectation that the government’s fiscal and debt position will continue to deteriorate.
Moody’s said; ”the affirmation of the Caa1 rating reflects Nigeria’s still weak fiscal and external position; the reform efforts may not be enough to improve its credit profile given Nigeria’s outstanding credit weaknesses.
Similarly, the outlook for oil production and external funding inflows remains key for any sustained improvement, but at this juncture remain uncertain.”
Moody’s suggests that the unification of Nigeria’s foreign exchange windows and devaluations of the naira, ”which represent first steps to addressing the country’s foreign exchange shortages and support its external rebalancing” is key driver for the upgrade from stable to positive.
”Moreover, the government has removed the largest part of the oil subsidy, a long-standing and often postponed reform. These policy changes, and those potentially to come, have raised the prospects of a fiscal and external improvement in the country’s credit profile,” Moody’s said.
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