Fitch revises Nigeria’s credit outlook to negative

Fitch Ratings has lowered its sovereign credit outlook on Nigeria to negative from stable, citing the depletion of its windfall oil savings and heightened political uncertainty ahead of elections next year. Nigeria’s rating of BB-minus, three notches below investment grade, was affirmed, Fitch said in a statement. The ratings agency said continued withdrawals from the excess crude account (ECA), into which Africa’s biggest oil producer saves crude oil earnings above a benchmark price, and lower forex reserves were a threat to economic stability. “The depletion of the ECA and continued gradual fall in international reserves at a time of high oil prices and record high oil production is a major concern,” sovereign ratings analyst Veronica Kalema said in the statement. “In addition, elections in the first half of next year have increased short-term political uncertainty,” she said.

Standard & Poor’s rates Nigeria one notch lower at B-plus. Analysts said the Fitch revision was unlikely to affect the pricing of Nigeria’s forthcoming $500 million debut global bond, which it plans to issue by the end of the year to establish a benchmark in the international market.