Fitch Ratings has upgraded Nigerian Lagos State’s National Long-term rating to ‘AA+(nga)’ from ‘AA(nga). The Outlook is Stable.The agency has simultaneously affirmed Lagos State’s Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘BB-‘ with Stable Outlooks and its Short-term foreign currency IDR at ‘B’.
Its N275bn MTN programme, together with its N57.5bn and N80bn bonds, which mature in 2017 and 2019, respectively, have been affirmed at ‘BB-‘ and upgraded to ‘AA+(nga)’ from ‘AA(nga)’.
KEY RATING DRIVERS
The upgrade reflects Fitch’s expectations of the state’s continued solid operating performance, improved transparency and efforts towards an increasingly sophisticated and transparent administration, which is conducive to growing private sector investments.
With a local GDP accounting for 20%-25% of the national GDP, Lagos is a key driver of Nigeria’s economy despite being the smallest state by territory. Domestic production is fuelled by its diversified economy as a commercial hub in the country, with service, construction, transport and industry making up 80% of the local economy.
Fitch believes that Lagos’ socio-economic indicators will further improve as local GDP growth is expected to outperform the estimated national GDP growth of 7%-8% in 2014.
