Standard & Poor’s Ratings Services affirmed its ‘B+’ long-term rating on Nigeria, Africa’s most populous nation and top oil producer, with a stable outlook before a $500 million Eurobond sale next month.
The agency also affirmed its ‘B’ short-term foreign and local currency sovereign credit ratings on the West African nation, it said in a statement today.
“The outlook is stable, reflecting our expectation that Nigeria will maintain its strong external and fiscal balance sheet and that its budgetary performance will gradually improve over the next few years,” it said.
The announcement “will help to allay the concern of potential investors in Nigeria’s Eurobond,” especially after Fitch Ratings cut its outlook on the country to negative from stable on Oct. 22, said Bismarck Rewane, chief executive officer of Financial Derivatives Co. Ltd., a fund manager.
Nigeria plans to appoint bookrunners next week for its first-ever Eurobond sale, planned for mid-December, Abraham Nwankwo, director general of the Debt Management Office, said today.
“The ratings on Nigeria are constrained by high political risk, but supported by a strong balance sheet,” Standard & Poor’s said in the statement.
The nation of about 150 million people is scheduled to hold general elections in April in which incumbent President Goodluck Jonathan, from the mainly Christian south, has said he will run. Politicians from the predominantly Muslim north say that decision runs counter to an agreement by the ruling People’s Democratic Party to reserve the office for the region until 2015. Jonathan stepped in to the office after the death of former President Umaru Yar’Adua, a northern Muslim, on May 5.
Fitch Ratings lowered its outlook on Nigeria’s BB- rating to “negative” on Oct. 22, concerned about withdrawals from the excess crude account and a drop in foreign currency reserves. The decline in reserves increased the risk to the economy from any renewed drop in oil prices, Fitch said.
Nigeria’s foreign-exchange reserves fell 7.6 percent to $33.9 billion in the month to Oct. 21, according to data on the website of the Central Bank of Nigeria.
Nigeria’s economy, the second-biggest on the continent after South Africa, is expected to grow 7.8 percent in 2010, up from 7 percent last year, driven by non-oil industries such as agriculture, central bank Governor Lamido Sanusi said on Sept. 21.
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