New Telegraph A sharp rise in Nigeria’s sovereign debt and a ballooning financing gap could trigger a rating downgrade, Reuters yesterday reported a Director at Fitch Ratings as saying.
The global ratings agency downgraded Nigeria to “B” in April with a negative outlook from “B+” citing aggravation of pressure on external finances.
Moody’s said in April it would likely downgrade the country if the government was unable to alleviate the damage to its revenue and balance sheet. S&P cut Nigeria’s rating in March on weakening external finances.
Reuters quoted Mahmoud Harb, sovereign ratings Director at Fitch as saying “we have two elements that could lead us to take a negative rating action/downgrade on Nigeria. Aggravation of external liquidity pressures and a sharp rise in government debt to revenues ratio.”
The debt to revenue ratio for Nigeria is set to worsen to 538 per cent by the end of 2020, from 348 per cent a year earlier, before improving slightly next year, Harb said. The medium debt ratio for “B” rated countries is 350 per cent, he said.
Nigeria will need $23 billion to meet its external financing needs this year, Fitch estimates, noting that the country only has few options, including running down its reserves, after shelving plans to issue Eurobonds.
