Global rating agency Standard & Poor’s has downgraded Nigeria’s credit rating further into junk territory on weak external position linked to the oil price crash, it said.
Nigeria’s long-term rating was lowered from B to B- (short-term still B) and S&P said the FG’s policy responses are unlikely to be enough to mitigate the effect of lower oil prices which will hurt Nigeria’s external and fiscal positions and put further pressure on the foreign exchange reserve.
Junk bonds are typically rated ‘BB’ or lower by Standard & Poor’s; B is a notch lower than BB and a speculative grade.
S&P had in early March lowered its outlook on Nigeria from “stable” to “negative” after Moody’s and Fitch slammed lower ratings on the country.
The latest downgrade of B- is only one notch above CCC which would mean that Nigeria is currently highly vulnerable to non-payment and S&P expects default to be a virtual certainty, regardless of the anticipated time to default.
Mexico, Oman, Angola, Kuwait, and Trinidad and Tobago also suffered a downgrade while S&P shifted outlooks on Colombia and Bahrain to negative.