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S&P Downgraded Nigeria

Standard and Poor's said Friday it has revised down its outlook for Nigeria's ratings to "negative"

S&P Downgraded Nigeria

The reason is falling oil revenue which puts pressure on public finances.

S&P affirmed Nigeria's "BB-" foreign currency and "BB" local currency long-term sovereign credit ratings, which means the government's bonds carry some risk for investors.
The revision of the outlook indicates that a downgrade of the main ratings is possible and the decision reflects Nigeria's overwhelming reliance on oil and the deteriorating economic outlook, the agency said in a statement.
Nigeria is a member of oil cartel the Organization of Petroleum Exporting Countries, which has slashed its production targets over the last six months to help prop up slumping crude prices.
S&P also expects bank profitability to be hurt by recently imposed ceilings on lending and deposit rates, which will reduce lending growth, and it also said foreign currency controls would weigh on the sector.
This "will in turn constrain overall GDP growth to 1.5 percent this year," it said. Last year's real GDP growth rate for Nigeria stood at 6.8 percent, according to the Economist Intelligence Unit.
"The ratings are unlikely to be raised in the near term given Nigeria's deteriorating terms of trade outlook and the opacity of public accounts," it added.
If the Nigerian government makes progress towards pacifying the Niger Delta and if it improves both the non-oil business environment and its own record of governance, S&P ratings could stabilise at the current level, the agency said.



Author: Ksenia Kochneva


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