Really moody financial call for Nigeria by Moody’s; two calls.
Moody’s places on review for downgrade the long-term deposit ratings of some banks in Nigeria: “Moody’s Investors Service has placed on review for downgrade the long-term deposit ratings, as well as long-term issuer and senior unsecured debt ratings, where applicable, of the following nine Nigerian banks. The banks are Access Bank, Zenith Bank, First Bank, United Bank for Africa Plc, Guaranty Trust Bank Limited, Union Bank of Nigeria, Fidelity Bank, First City Monument Bank and Sterling Bank Plc. The credit rating agency said its decision to place the long-term ratings of the banks on review for downgrade reflects the risk of increasing foreign currency rationing that could compromise the banks’ operational ability to meet their foreign currency obligations, as well as the risk arising from a potential material depreciation in the country’s foreign exchange rate to the banks’ capitalisation and asset quality.”
Moody’s has also downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings: “Moody’s Investors Service has downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2, placing them on review for further downgrade. According to the global rating agency, the downgrade is driven by the significant deterioration in the country’s public finances and its external position, increasing pressure on the sovereign credit position despite the bullish crude oil market.
“Moody’s assessment is that these developments are partly the result of weak governance and likely to last. 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,” its announcement said.
With these outlooks or downgrades, the cost of borrowing and financing debts across many domains in the country will go up. To overcome the paralysis, Nigeria will need to do things differently and that is why the 2023 elections must be won on new ideas.
Comment on Feed
Comment: How strange… Moody’s downgraded the UK outlook from ‘stable’ to ‘negative’ after we tried to bring in ‘new ideas’. Were they seeking a headline or two?
You can’t have it both ways.
My Response: Moody’s writes for its clients and not the society. You may be trying to do what you think will help your economy, but it may not be great for the core of Moody’s primary client base. If you reduce the tax base to boost growth, you also make it harder to have funds to pay for interest on loans, especially in the short-term.
