Fitch rates Nigeria’s USD Diaspora Bonds ‘B+(EXP)’

Fitch Ratings has assigned Nigeria’s upcoming USD- denominated senior unsecured bonds 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 ratings agency said Wednesday. 

The expected rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’. The Outlook on the IDR is Negative.

The rating is sensitive to changes in Nigeria’s Long-Term Foreign-Currency IDR. On 24 January 2017, Fitch affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ and revised the Outlook to Negative. The Long-Term Local-Currency IDR was also affirmed at ‘B+’ with a Negative Outlook.

Nigeria started an international road show on Tuesday, for the sale of a diaspora bond after naming Bank of America Merrill Lynch and Standard Bank of South Africa as joint lead managers.

Africa’s biggest economy first unveiled in 2013 plans to sell diaspora bonds worth between $100 million to $300 million from Nigerians living abroad. But the government at the time did not appoint a book-runner until an election brought the opposition into office.

A roadshow will start on June 13 with meetings planned in Britain, Switzerland and the United States, the debt office said in a statement.

“Nigeria has filed a registration statement for the Bonds with the United States Securities and Exchange Commission,” the statement said, adding that the Bonds would be listed in London.

It gave no price expectations.

Nigeria, grappling with its first recession in 25 years that was largely brought on by low oil prices and the impact of militant attacks on energy facilities in the Niger Delta, has set a budget of 7.44 trillion naira ($23.66 billion) this year.

The West African country expects a budget deficit of about 2.21 trillion naira in 2017 as it tries to spend its way out of a recession, with more than half the deficit to be funded through external borrowing.

The OPEC member successfully raised $1 billion in February and $500 million in March from Eurobond sales and is planning more external borrowing to plug the gap in this year’s budget.

LOLADE AKINMURELE