Fitch rates Nigeria’s upcoming Eurobond B+

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Yemisi Izuora

Global rating agency, Fitch Ratings, has assigned B+ ratings to Nigeria’s upcoming $1 billion Eurobond. A B+ rating is usually the lowest investment grade rating assigned to a security which signifies that the issuer (Nigeria) has a moderate chance of default.

However, some analysts believe that a deeper assessment, shows the concerns foreign investors have about the country’s macro-economic and foreign exchange policies.

They also said this meant the road show embarked on by the federal government team led by Finance Minister Kemi Adeosun and Deputy Governor of Central Bank of Nigeria, CBN, Mrs. Sarah Alade, might not yield much.

The other implication is that the country will pay a higher premium for the bond issue, to encourage investors to subscribe.

This current rating is coming one week after Fitch downgraded the outlook on Nigeria’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to Negative from Stable and affirmed the IDRs at ‘B+’. The B+ Eurobond rating is also coming less than a week after Standard and Poors, another global rating agency, assigned the bond a “B” rating.

A statement by Fitch announcing the Eurobond rating said: “Fitch Ratings has assigned Nigeria’s upcoming USD denominated senior unsecured notes an expected rating of ‘B+(EXP)’.

The assignment of the final rating is contingent on the receipt of final documents materially conforming to information already reviewed.

The expected rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’, which has a Negative Outlook. The rating is sensitive to changes in Nigeria’s Long-Term Foreign-Currency IDR.
On January 24, 2017, Fitch affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ and revised the Outlook to Negative from Stable. The Long-Term Local-Currency IDR is also ‘B+’ with a Negative Outlook.” The Bond proceeds will be used to fund the nation’s 2017 budget.

Nigeria last accessed the bond market in July 2013 raising $1 billion dollars in five and ten year debt respectively.

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