Downgraded Nigeria’s Local And Foreign Currency Ratings By Moody’s
Downgraded Nigeria’s Local And Foreign Currency Ratings By Moody’s
Global rating agency, Moody’s has downgraded Nigeria’s local and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2 and placed them on review for downgrade.
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This is contained in a rating report issued by Moody’s on October 21 2022 indicating that the decision was due to a significant deterioration in Nigeria’s government finances as well as its external position.
Moody’s stated that the deterioration of government finances exerted increasing pressure on the sovereign credit profile despite a strong increase in international crude oil prices in 2022.
Moody’s explained Nigeria’s fiscal challenges and dwindling external reserves contributed significantly to the decision to downgrade the country’s ratings from B2 to B3.
Downgraded Nigeria’s Local And Foreign Currency Ratings By Moody’s
“Moody’s Investors Service (Moody’s) has today downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2 and placed them on review for downgrade. Concurrently, Moody’s downgraded Nigeria’s foreign currency senior unsecured MTN rating to (P)B3 from (P)B2, also and placed it on review for downgrade.”
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Moody’s also pointed out Nigeria’s oil revenue challenges despite a rise in oil price while also pointing out the depreciation of the naira due to demand pressure as specific factors that influence the downgrade.
“The steep fall in oil production in 2022 and the extension of the expensive oil subsidy have almost entirely eroded the boost to government revenue and exports that would otherwise have been anticipated from higher oil prices. Policy levers available to manage weaker oil revenue and rising borrowing costs amid monetary tightening in Nigeria and globally are limited.”
Downgraded Nigeria’s Local And Foreign Currency Ratings By Moody’s
“Similarly, on the external front, the capacity of the Central Bank of Nigeria (CBN) to protect foreign exchange reserves from external outflows has its limits.”
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The rating review pointed out that government revenues deteriorating affect the ability of the government to service its debts placing the country at risk of default.
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