S&P lowers Nigeria ratings to ‘B/B,’ stable outlook on weak growth dynamics

Ratings agency Standard & Poor’s (S&P) has revises Nigeria’s sovereign credit outlook up to stable from negative; Current rating is B

S&P expects a 1% contraction in Nigeria’s real GDP growth in 2016, feeble growth of 2% next year, a return to higher growth of 4% only from 2018. “A stable outlook signals assessment that at this lower rating the risks to the government’s credit standing are balanced,” the agency says.

S&P  lowered its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B+’, although the country’s government debt remains low, debt servicing costs as a percentage of general government revenues are high and rising.

The agency notes that Nigeria’s economy has weakened owing to marked contraction in oil production, restrictive foreign exchange regime and delayed fiscal stimulus.

It estimates sector wide credit losses to likely be between 3.0%-3.5% of loans in both 2016-2017.