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Fitch gives final rating of ‘B+’ to Nigeria’s $1.5bn Eurobond

The global rating agency, Fitch Ratings, has awarded its final rating of ‘B+’  to the $1.5 billion Nigeria’s 6.5 per cent senior unsecured notes (Eurobond) due on November 28,  2027 and the $1.5 billion  notes of 7.625 per cent coupon with November 28 2047 maturity date.

The final rating replaces the expected rating of ‘B+(EXP)’ that the rating agency assigned on November 15,  2017.  Fitch had explained then that “the assignment of the final ratings is contingent on the receipt of final documents materially conforming to information already reviewed.”

It added that the “expected rating was in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’ with a negative outlook.”

The rating is sensitive to any changes in Nigeria’s Long-Term Foreign-Currency IDR.

Recall that Fitch, on August 31,  affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ with a Negative Outlook. The Long-Term Local-Currency IDR is also ‘B+’ with a Negative Outlook

Just last week, Moody’s Sovereign Rating downgraded the country from B1 stable to B2 stable, a rating the Federal Government, has since  faulted.

In a statement issued in Abuja by the Debt Management Office (DMO) on behalf of the Ministry of Finance and the Central Bank of Nigeria (CBN), the Federal Government said the premise for the rating was faulty, adding that since Nigeria’s last rating in 2016, the nation had made quantum leaps in several economic frontiers.

The statement read in part, “The attention of the Federal Ministry of Finance, Central Bank of Nigeria and the Debt Management Office has been drawn to Wednesday’s announcement of the decision by Moody’s to downgrade Nigeria from a B1 stable to a B2 stable rating. “This is equivalent to Nigeria’s existing B/stable outlook rating from S&P and slightly lower than Nigeria’s B+/negative outlook rating from Fitch. While we respect the right of Moody’s to make this decision, we strongly disagree with the premise and must address some of the conclusions upon which the decision rests.”

The Federal Government said since Nigeria was last rated by Moody’s as B1 stable in December 2016, the country had successfully emerged from a protracted recession and recorded important improvements across a broad range of indices.

It listed the areas to include a return to economic growth of 0.55 per cent in the second quarter, and returning business confidence, as evidenced by a PMI index of 55.0; stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates; and significantly improved foreign exchange reserves, now totalling $34 billion.

Others are increased oil production, combined with stable and now improving oil prices; slowly improving revenue profile, with non-oil revenue (principally taxes) up by 10 per cent; month-on-month improvements in inflation levels since January 2017, with inflation continuing to trend downwards; strong year-on-year improvement on the World Bank Ease of Doing Business rankings from 169th to 145th place, a 24 place move in one year; and the highest capital expenditure deployment since 2013, making investments in critical infrastructure to support further growth.

The government said it had put in place a number of measures to improve revenue collection as the Federal Inland Revenue Service had made good progress in increasing revenue with the introduction of a tax amnesty and plugging of leakages and deployment of technology-driven revenue management strategies.

It added, “We have seen improvements in revenue in 2017. Fiscal revenues are linked directly to both the performance of the economy and the number of taxpayers contributing. As a result of the foundation that has been established in 2017, we expect similar positive trends in 2018.

“Our revenue initiatives are changing the mix of revenue sources available to government from the traditional oil or debt to a combination of oil, debt and domestic revenue.”

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