Moody’s maintains Nigeria’s credit rating with outlook positive

Daba Finance/Moody’s maintains Nigeria’s credit rating with positive outlook

AFRICAN BUSINESS AND ECONOMYJune 23, 2024 at 5:56 PM UTC

TLDR

Moody's Investors Service maintains Nigeria's long-term foreign currency and local currency issuer ratings at Caa1 with a positive outlook.
Factors for the positive outlook include improvements in Nigeria's external balance, prospects of positive economic change, clearance of the forex backlog, and hawkish monetary stance of the Central Bank of Nigeria (CBN).
Moody's also affirms Nigeria's foreign currency senior unsecured debt ratings and MTN program ratings at Caa1 and (P)Caa1 respectively.

Global Ratings agency, Moody’s Investors Service, has maintained Nigeria’s long-term foreign currency and local currency issuer ratings at Caa1, with a positive outlook, consistent with its last review in December 2023.

In its recent report on Nigeria’s fiscal position and overall economy, Moody’s also kept the country’s foreign currency senior unsecured debt ratings at Caa1 and the foreign currency senior unsecured MTN program rating at (P)Caa1.

The agency stated that the affirmation of the positive outlook is based on several factors: improvements in Nigeria’s external balance, prospects of positive economic change, the clearance of the forex backlog, and the hawkish monetary stance of the Central Bank of Nigeria (CBN) in the first half of the year.

Key Takeaways

While the overall rating is positive, Moody's notes that inflation remains a significant risk to Nigeria's outlook, exacerbated by the high cost of subsidies and the reintroduction of cash support to the "most vulnerable" Nigerians. The report also projected that Nigeria’s fiscal deficit is expected to rise to 7% of GDP this year. Despite efforts by the federal government to increase tax revenue, these measures are unlikely to offset the current spending pressures. This fiscal imbalance poses ongoing challenges to Nigeria’s economic stability and growth prospects.

Moody's

Nigeria

Credit Rating

CBN

Monetary Policy

Foreign Exchange