By Stephen Nakrosis
Moody’s Investors Service said Friday it was downgrading Nigeria’s local currency and foreign currency long-term issuer ratings to B3 from B2, and placing them on review for downgrade.
Moody’s also lowered its rating on the country’s foreign currency senior unsecured debt ratings to B3 from B2, similarly placing them on review for downgrade.
The rating downgrade is driven by significant deterioration in government finances and its external position, Moody’s said.
Nigeria, a member of the Organization of the Oil Producing Countries, or OPEC, has been unable to benefit from a strong increase in international crude-oil prices, Moody’s said. According to Moody’s, “the steep fall in oil production in 2022 and the extension of the expensive oil subsidy have almost entirely eroded the boost to government revenue and exports that would otherwise have been anticipated from higher oil prices.”
Moody’s also said financial and capital outflows from Nigeria are exceeding its current account surplus.
Further, “the review for downgrade is prompted by the risk that the ongoing fiscal and external deterioration accelerates, weakening further the government’s capacity to service debt and thereby increasing further its risk of default,” Moody’s said.
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
