Global rating agency, Fitch Ratings, yesterday assigned a ‘B+(EXP)’ rating to Nigeria’s upcoming $2.5 billion Eurobond. The rating implies the presence of default risk with a limited margin of safety.
The $2.5 Eurobond is part of the $5.5 billion foreign loan approved by the Senate on Tuesday. The Federal government said tthe $2.5 billion Eurobond is to finance the 2017 Appropriation Act while the $3 billion is to refinance domestic debts.
In a statement announcing the rating, Fitch said: “Fitch Ratings has assigned Nigeria’s upcoming senior unsecured USD-denominated notes an expected rating of ‘B+(EXP)’.
“The assignment of the final ratings is contingent on the receipt of final documents materially conforming to information already reviewed.
“The expected rating is in line with Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B+’ with a Negative Outlook.
“The rating is sensitive to any changes in Nigeria’s Long-Term Foreign-Currency IDR.
“On 31 August 2017, Fitch affirmed Nigeria’s Long-Term Foreign-Currency IDR at ‘B+’ with a Negative Outlook. The Long-Term Local-Currency IDR is also ‘B+’ with a Negative Outlook.”
Data released by the Debt Management Office (DMO on Tuesday showed that Eurobonds account for 21.5 percent of the country’s $15.35 billion foreign debt and 53 percent of debt service payments in the third quarter.
Total domestic debt stood at N15.68 trillion as at September, compared with N13.35 trillion last year. Multilateral loans, including financing from the World Bank, accounted for 64.5 percent of foreign loans while bilateral loans with China and other countries make up 14 percent.
